I think the problem is because the OU masters tend to be three modules only getting a pass only in the final one can bring you down to a postgraduate diploma instead of the masters because of weighting (if I remember correctly and I might not, it was years ago I did mine with them).
You could try your course OUSA rep (assuming they still have them - I was one for science, technology and maths in Wales almost twenty years ago) they're students but know how things work and can possibly help support you in an appeal.
In my experience from then (someone in very dire circumstances came to me for help resisting uncapped and was refused) you would be allowed resit but not allowed to do so uncapped. BUT that was then and things might have changed.
My silly mistake was when I took an A-level 20+ years ago and for my practical (home economics) I needed to make a dish for a special diet and chose vegetarian. I decided to add ham to the macaroni cheese to make it taste nicer
. The person testing me even hinted I shouldn't put it in but I'd read how it would make it taste nicer and insisted, immediate fail. I even stood there arguing how much nicer it made the main course

I never owned up in RL that was why I failed. I even pretended to sit the exams!
I once bitched about someone in an interview - I was asked my professional opinion of someone who was a total idiot and didn't hold back. It was a panel of three people and the guy to the left, was, the total idiot. The guy asking the questions even tried to stop me, but once started I couldn't stop. Unbelieveably I got offered the job! I turned it down though as I would have been directly working with said idiot and it would have been horrendous - I didn't need to ask which of the three vetoed my application, it was a small place and I'd met him after the interview and he said I'd never work with him if it was the last thing he ever did. I'd just graduated, I'd never met him but he'd been used as an example of what not to do in the profession, never occurred to me he'd be interviewing me! 