I'm not sure from your post. Did you contact Apple directly and get the run around?
I know there was an issue with sometime last year with their reset password (and security questions). Someone managed to use a combination of different companies (including Apples) procedures to commit identity theft (or something similar).
Apple's been a bit skittish since.
Unfortunately, once the serves have decided you need to answer the security questions, they get really insistent on the issue. In my experience, the security question issue could only be solved/answered from my computer. Every attempt to answer the questions on the iPad, when prompted, failed. Instead I had to go to my account in iTunes on the computer, or access my account via the Apple support site. I forget which worked.
At any rate, keep pushing the iTunes support buttons. Politely, but firmly, insist on a resolution. They have every reason to solve this. After all, how else are they going to get your money?