I think where it went wrong here is that when it asked you for your "passphrase" (which is called a recovery key) it's very likely it wanted your login password instead. (Because that is indeed needed to reset the recovery key).
The recovery key (whitespace doesn't matter btw, it's just a 48 char string) is only needed when you logout of all devices and subsequently want to restore your encrypted messages.
Even so, the fact that this could cause such confusion is a valid point, and more care need to be taken to differentiate the purpose and situation for each. It's a software problem, not a user problem.
Of course you might agree with this, and i personally find the key and password management quite problematic after using it with a few non technical people.
They should have taken a page out of Bitcoins/Ethereums book and used mnemoic phrases and clearly labelling them as "Recovery key" with big red bold letters everytime you enter it.
yeah, that would definitely help! I find it sad that so many high profile open source projects lack in UI, even though there's a lot of smart people working on them.
Maybe it's a question about prioritizing time for technical features and downgrading the importance of a good UI and onboarding. Since time is limited, but in the case of matrix, I would say UI is just as important as the technical part. If they get more funding, maybe it will change in the future.
The recovery key (whitespace doesn't matter btw, it's just a 48 char string) is only needed when you logout of all devices and subsequently want to restore your encrypted messages.