Looks like a case of sheer incompetence, as expected from 888.com. Littlewoods is no longer the Littlewoods it was. When it changed from Crypto to Cassava I quit playing, this is my "vote of confidence" for Cassava enterprises.
Keep that email, since you have evidence of a breach of the regulatory rules, since they told you in writing that you were "good to go" to open an account at Littlewoods. They had plenty of opportunity to say NO straight away, and save you the bother of depositing.
You can
PAB, or submit a complaint to Gibraltar. You may even find they are eCogra sealholders. Since you have not managed to place a bet, they should find it easy to just return your deposit, so you could start the process by giving them notice of intent to complain to Gibraltar, for example, if they have not returned your money within 14 days (should be more than reasonable given that Moneybookers is "instant").
You should avoid ALL properties related to Cassava enterprises, since they have a history of blunders and cock-ups (Reef Club & Lucky Ace to name two)
I did play for a while at Reef Club, but then they introduced predatory terms and conditions, which scared me off.