Am I alone in thinking the current student discount scheme on TfL is a
mess, both in the application and the discount available?

[snip]

Has anyone else noted similar problems?

Yes. Because of the delays in getting a card., you are also prevented from
buying an annual ticket (and therefore further savings). The card is encoded
to only sell tickets with a discount if they expire before 30 September.
Last year I didn't get my card until part way through October. I asked to
have the ticket backdated to start 1 October so it would allow the discount
(it worked out cheaper for me still), but was told it could not be done. To
add insult to injury the ticket office man tried to sell me a ticket that
would cover me from that day up to 30 September. This worked out more
expensive that the annual! I went to several tube stations and eventually
found someone human who was prepared to do it. Fingers crossed I will find
another one this year (that station no longer has a working ticket office).

Next year will all be done online, lets hope.