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ref: Return structured error when update error is not ErrAlreadyLocked

John Cai requested to merge jc-fix-delete-refs into master

We have a bug wherein we still return a successful response with an error embedded in the response if the Prepare() step fails with an error but the error is not an ErrAlreadyLocked. Fix the code such that we return an error instead of a response when there is a non ErrAlreadyLocked error during the Prepare() call.

changelog: fixed

fixes: #4497 (closed)

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