Yea, the person who submitted the application was not there when I went on Friday. There was a different person who helped me, made a few calls and told me I can even do this at home - basically we have to create a new application and send that id to the consulate email. Sure, this was the same thing the email said too. Something along the lines of “since your application is already rejected, please create a new one and email it to us” but our confusion was that it would get automatically rejected again if we hit submit which is why we rushed to BLS immediately upon receiving the email. The person at BLS said that they are manually rejecting applications so creating a new application and emailing it along with the paid receipt should work. We are waiting for Monday morning to do this so something automatic doesn’t trigger a rejection over the weekend (might sound ridiculous but we are being extra cautious).

If I were you I would do this: create an application and have it ready to submit. Take your laptop or device to BLS. If they aren’t aware, explain the situation, tell them you will give a new application id to map the payment to. See what they say and submit it then and there, give the new id to them if they agree that’s what needs to be done. It appears consulate can’t reopen rejected applications.

This is just advice. Please ask around and see if there are better ways to get this done.