It looks like my application for IRL has been denied

I submitted my application for ILR via the ancestry route using the SET(O) form several weeks ago. My employers requested confirmation of my application review and they received an email with the following statement:

"This person does not have the right to work in the UK. An application for leave in the UK has been submitted but this was done so after the expiry of the person’s previous leave. You should not employ this person, or continue to employ them, if they are an existing employee as they do not have the right to work in the UK."

I can gather that my application has been denied but I am unable to contact the Immigration Office to confirm this. I would like to know what my recourse is (assuming it has been denied) so I can move forward with a plan.

1. Is there a way to appeal the decision and if so can I do it from within the UK?
2. I have been in a long term but not co-habitating relationship for two years and we have discussed getting married. If we were to do this would I be able to stay / apply for a different visa?
3. How long will I have to stay in the country once I receive confirmation of the denial?

I have contacted the Citizen's Advice Bureau and an immigration specialist will contact me back in a few days time, in the mean time I would appreciate any advice, or anecdotes from people that have had similar experiences.

Thanks!

Did you apply after your visa expired?

Wanderer wrote:Did you apply after your visa expired?

Seconded. Because you applied after the expiry of your visa, you automatically lost the right to work. If you applied within 28 days of the expiry of your visa, it does not always mean an automatic refusal.

Yes, I unknowingly applied after my visa had expired. I failed to get an visa extension between the visa expiry and the completion of my 5 years in UK. I intend to leave the country as soon as my passport has been returned and reapply for my ancestry visa from my home country. Will I be denied a second ancestry visa because I have overstayed in the past? I have overstayed for nearly 3 months.