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@ffub
I'd definitely get the advice of a lawyer on this one. If you provided them with the means to identify your bike before or during the time they had it, then it should never have gone to auction. It also sounds like they auctioned it well before the time it's supposed to be kept for.
What the police are supposed to do once they've auctioned something and the original owner turns up I have no idea. I'm guessing it favours the winner of the auction because they can't hold on to the goods forever and the item was not identifiable. But in your case the item was not identifiable because of the police's incompetence, not from any lack of effort on your part.
They have effectively sold stolen goods, because they were given the means to give them back. I'd definitely look into whether you could sue them for it. I'm no lawyer (I'm a designer), but I have successfully sued the police for negligence before.