"client had had the balance of the account transferred to his personal Vanguard account."

If all of this went to a Brokerage account, that is a full conversion to normal funds, the same as if this was put in savings. It no longer is retirement or deferred or even qualified for rollover. This would have been pro rata taxabled at the time it converted. That also would explain the commingling. Have you looked at the tax return from that year and the 1099-R? The only part that would not be taxable is anything that was contributed post-tax (basis).

All of the rest is moot, now that we know it came out of a sheltered status.

And this part makes no sense: I asked if the 1099-R broke it out into two parts?  Answer: 1099 only showed $100,000 in total.  He normally withdraws the $25,000. 

But a 1099-R is not issued for amounts out of a Brokerage account. Also, you cannot arbitrarily or with any responsibility assign what is or is not the split of the 1099-R. The split is what occurs afterwards. That's why there is no corrected 1099-R expected, even if this makes sense from 3-years ago.

The $100,000 reflects the amount removed. Period.

I don't understand how some brokerage account amount can be treated as a rollover, three years later. I don't know about corrective actions for some action taken three years prior to the action taken now, when the brokerage made the mistake. Vanguard's letter doesn't control how the IRS would even require this to be treated. I'm pretty informed on this stuff, and have even had Schwab admit to errors in handling accounts (and tons of Payroll providers, too). This one is going to require some research, as I noted, but first, you might find it's all water under the bridge.