What seems to have happened here is that you were regarded as
re-starting the journey which you first started at Waterloo. The system
took back the £2.50 that it had refunded you on leaving Holborn 35
minutes earlier and then on leaving Arsenal you were refunded £2,
meaning that you had paid £2 for a Waterloo to Arsenal journey.

But why? Is Holborn an out-of-station-interchange?

If the original poster had made just a slightly longer second journey he
would have been charged an extra 8 Pound.

What is the current situation in such issues? Is it now possible to
resolve incorrect deductions with a visitor-oyster or an unregistered
oyster?

Martin