It's been awhile since I redeemed mine but I had the same problem.
I think I got it to work by going to the microsoft store searched for a 1600 points card, added it to my cart, went to checkout, and while going through the checkout process found a place to enter a code.
I think the offer was only for a certain timeframe and now the store only sells 50 or 25 cards. Think you may be boned.
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