Was it my fault that I put that money there?
Yes, passports are not meant to be used as wallets. The agent most likely thought you arewere offering a bribe, it is a common practice in some countries to offer money to officials but not in most. I guess he felt offended.
Did I block off something important?
Perhaps the thin case made the passport harder to scan in the MRZ scanner, rubbing salt into the "bribe" wound.
Maybe they thought this is some sort of bribe??
Most likely, as I said earlier.
What were they looking at with that device? What's on that page?
To check for counterfeit passports, especially since the agent thought you just offered a bribe! orOr perhaps the thin case made the ink smear somehow, making it look "fake".
Putting myself in the agent's place, scanning passports all day is a routine job indeed! most likelyProbably that's combined with some old slow system that makes the job even less appealing. The last thing I want is some protective case that makes a boring job even more boring and harder.
As a courtesy to the border/customs agents and to avoid any misunderstanding, always make things easier for them, remove the passport protective cases before handing them the documents, remove papers and other stuff you keep inside the passport, give them the luggage with the lock facing them and not upside down, etc.