Thanks Jim for your comments and I agree 100% about accepting cut wire returns. Last week someone returned 50 or 60 feet of 6/3, it looked like it had been pulled through framing then yanked out again for whatever reason. The sheathing was beat up yet we took it back, not sure if it was sold again or not. As far as the guy in question, it's odd to me why he didn't take it (The placement of the wire tells me he didn't even make it out of the store before throwing it aside) as he seemed content on his selection.
He was just to arrogant to concede that a "Home Depot" employee may actually know more then him. I should add a good friend of mine (about 60 years old) was recently hired as the local Home Depot electrical dept. expert and he took the job because the pay and benefits make it a good deal. and he is not afraid to tell people when they are in over their heads and need to call a professional. It is nice to see that you are taking the effort to look things like this up in the NEC. You can't keep people from doing stupid things, but imagine just what they would do if no one was there to give advise ? Scary thought.