Can I sue my University for emotional distress and failure to follow school policy?

The short, practical answer to your question is it won't be worth your time and resources to pursue this matter, at least that is my opinion. The fact that you have haven't had any other responses in five days bears that out as well. It will cost you far more money and time than the $700 and the inconvenience of suffering you may have experiences. By the way, making a claim for the intentional infliction of emotional distress is quite difficult, even in the best of circumstances and those circumstances don't appear to exist based on your description of the events. My advice: If possible, take the class over with a different instructor and see if that will improve your GPA or class standing,, get answers to your questions up front, especially about using other class work for the current class, and move on. Sometimes, there just isn't a legal remedy available. Best of luck.