According to what you read, you might qualify for P&T if your combined rating is over 70% with one item at 40% or more. The VA told you that since you're 100%, you should be P&T, but you're not sure that's right.
On top of that, your severe insomnia wasn't mentioned in the letter at all. It's frustrating because it's a significant issue for you, and you've had it well-documented.
If this explanation isn't clear, I found a source that might help: https://ptsdlawyers.com/appeal-a-va-decision/. It could provide more information on what steps to take next and how to handle deferred items or missing conditions in your letter.