ARTCC CTLR AT ZID WORKING ACFT X EBOUND AT FL330. ACFT Y WBOUND AT FL310 WAS BEING WORKED BY ZDC REQUESTING FL350. ON INITIAL CONTACT WITH ZID; ACFT Y RPTS CLBING TO FL350. THE FL350 DID NOT REGISTER WITH THE CTLR UNTIL THE ARTCC CONFLICT ACTIVATED AS THE ACFT PASSED FL314. ALT CORRECTED BY THE CTLR BUT THE INCIDENT RESULTED IN A SYS ERROR.

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ACFT X WAS EBOUND ON J42 W OF BKW. ACFT Y WAS CLBING WBOUND OVER BKW; REQUESTING FL350. ZDC CALLED AND COORDINATED ACFT Y CLBING TO FL310 AND I APPROVED THAT ACTION. THE DATA BLOCK OF ACFT Y HAD BEEN MANUALLY CHANGED BY ZDC TO SHOW FL310 AS AN ASSIGNED ALT. I WAS AWARE THAT ACFT Y WAS STILL REQUESTING FL350 BUT WAS MISLED BY ZDC THAT THE ALT ASSIGNMENT HAD BEEN AMENDED BY THEM. ACFT Y CALLED ON THE FREQ AND STATED 'CLBING TO FL350.' THAT ALT WAS NOT HEARD BY ME OR MY TRAINER OR THE D-SIDE CTLR. WHEN ACFT Y AND ACFT X WERE IN CLOSE PROX OF EACH OTHER; I CALLED THE TFC TO BOTH -- STATING 2000 FT BELOW/ABOVE. WHEN ACFT Y MODE C READ OUT FL314 CONFLICT ALERT ACTIVATED. MY TRAINER IMMEDIATELY ISSUED 'ACFT Y MAINTAIN FL310.' THAT INSTRUCTION WAS ROGERED BY THE ACFT. MY INSTRUCTOR (TRAINER) THEN STATED 'ACFT Y SAY ALT.' ACFT Y RESPONDED 'FL310.' WE WERE ALL UNDER THE IMPRESSION WE HAD EXPERIENCED A MODE C SWAP FROM THE OTHER NUMEROUS TFC. WE WERE NOT AWARE A SYS DEV HAD OCCURRED. ZDC'S ACTIONS AND FAILURE TO AMEND ACFT Y ALT AS COORDINATED WAS A MAJOR FACTOR IN THIS DEV. THE DATA BLOCK DID NOT CONVEY THE ACTUAL INFO. I REALIZE FULLY MY RESPONSIBILITY TO 'HEAR' THE ALT STATED BY THE ACFT. HOWEVER; I FEEL THE ACTIONS AND INACTION BY THE ZDC CTLR WAS SIGNIFICANT.