The barrel can't look into containers that are inside other containers, so they are rejected. Protected items are things like blessed clothing or other high value items. Honestly I've not had any trouble turning in a few hundred bags full of stuff.
Make a restock macro that will pull containers and spell books out of the bag.. Or, even better. Just make a restock macro that focuses on weapons and other items. and organizes them to a box. It's really not that much of a nightmare you just have to not include containers or protected items and do a tad bit of organizing. All of which can almost be completely automated. Restock, Organize, Life+Drop bag repeat. Set it up once, cub for lyfe.
Like others said, you shouldn't have any issues if you do JUST items in a container. You cannot CuB containers either (bags, pouches, crates, ect...) I have throw over 15k items in the barrel and 99% of that was done with bags full of 125 items. Also shown in the image here is a single bag I have with about 90 non-CuB items.
If you throw it in the barrel and it can be processed then it goes away, no protected items unless CuB cannot process them at all. Video link posted of how I got most of my copper from years of hording magic weapons/armor. Hard to see in the video because its all in fast forward but I was lucky to have no containers within containers from day 1.
If house-A has a CuB Barrel locked down in it then the character who owns house-A needs to use the barrel options to assign an owner. The owner of the barrel doesn't need to be the house owner. The barrel does need an owner for you to extract copper from it though.
Gotta agree with @One I've done a lot of CUBBING & there hasn’t been a single thing that’s popped up with a protected status that I’ve wanted to keep. It’s all trash like that wand. And it makes the process so, so painful. I reckon I’ve got that message 200x easily. A quick solution would be for you to make the protected item list public as an organiser agent for razor so we can run that on bags first?
If I had to guess it is because the wand is a newbied item and is protected (very few items will cause a turn in to fail). Gold, Platinum, Anniversary hues, Blessed and Newbied items are about the only things that will cause this. This check is before it even bothers to find anything out about the item so the only solution is to look into why those are newbied.