Ok, so here is the rule governing this situation.
The rules in affect are 2(b)(3) and 2(c).
Remember there was an inadvertent whistle before either team had gained possession after the kick. That is where 2(b)(3) comes in. So the ball goes back to the original line of scrimmage and the down played over.
Also, there was a holding penalty on the play. That is where 2(c) comes in. First down Arkansas.
Hope this helps clear everything up.
There is also this in the rule book:
Postscrimmage Kick Enforcement
ARTICLE 3.a Under postscrimmage kick enforcement rules, fouls by Team B
that satisfy the conditions in paragraph b (below) are treated as if Team B had
been in possession at the time the foul was committed, even though by Rule
2-4-1-b-3 team possession had not changed.
b.Postscrimmage kick enforcement applies only to fouls by Team B during a scrimmage kick and only under the following conditions:
1.The kick is not during a try, a successful field goal, or in an extra period.
(A.R. 10-2-3-IV)
2.The ball crosses the neutral zone.
3.The foul occurs before the end of the kick (A.R. 10-2-3-I, II, and V).
4.Team B will next put the ball in play
If these conditions are all met, the penalty is enforced according to the
Three-And-One Principle. Team B is taken as the team in possession with the
postscrimmage kick spot as the basic spot (Rule 10-2-2-c). (A.R. 10-2-3-I-VII)
Because the penalty fell under "postscrimmage kick enforcement," as evidenced by the fact that the officials had originally given the ball to VT (with the penalty enforced), this would cause a conflict with your article 2.c. The officials incorrectly enforced the postscrimmage penalty.
After digesting all of this, it appears to me that the most correct action would have been to simply replay the down from the same spot -- no penalty enforced, since the penalty for the foul they're trying to enforce assumes that "Team B (VT) will next put the ball in play" (which clearly isn't the case here).
They enforced a postscrimmage kick foul as a non-postscrimmage kick foul, and obviously that is incorrect.