I have had this problem before at a couple of out stations. If they don't get your photo, they have no other way to verify you are in CASS. They can try again and again, but it has to show up. I had one gate agent tell me that they actually have 10 seconds to see the photo. If it doesn't show up by then, or if it shows after, it's an invalid photo and they try again.
However, I am surprised they wouldn't let you get on. Were there no open seats in the back? Each time they cleared me for a seat in the back (after verifying my employment), but informed me that I couldn't ride in the cockpit.
Not sure if that really helps. Sounds like you did all you could, and thankfully had a helpful gate agent.