I would consider it a software bug. Some people contacted me here by PM who had the same problem. With the client 0.3.0 it was possible to create a new seed, but then it was saved under the address which was created by the previous seed, if you didn't click the "generate address from seed" button again before clicking the "register" button. This is the same problem as I described with the empty seed, but the problem was more serious, because any previous seed which generated an address and was then overwritten caused this bug, and this happened for some people.

The message that there is not enough balance is returned, because the balance which is displayed uses API functions which requires only the public key of the first address. But when you want to send some money, the seed is used to create the private key and this uses the new address (which is not visible, because balance and transactions are using the old address). Usually the new address has no balance.

If someone sends the devs the local storage object of Chrome, they can verify and confirm it. Unfortunately I don't see a way that someone can prove it was an accident and not done intentionally to get some free money. And the private key was not saved in the local storage object, which might be a good idea, too (the seed is already stored, and all password encrypted, so no security problem), and which would have provided a solution to the problem.