Testing this with ignored and muted users on the latest version of Discourse, what I’m finding is that replies to a topic that I’m watching show up as unread posts in the topic list. Replies created by an ignored user also cause the topic to show up in my Unread list.
Visiting the topic removes the reply count though. I think that this is the expected behaviour, but I could see how users might expect not to be shown any details about replies created by muted or ignored users.
What I’ve found doesn’t seem to explain what is happening to the user on your site. What they are describing sounds similar to the issue described here: Can't dismiss unread if last post is an assign or whisper. That is a bug that has come up a few times, but I’m not able to reproduce it on the latest version of Discourse.