When the alt-nick box is blank, the (optional) graytext is getting in the way:
1. edit options to make sure the alt-nick box is blank
2. connect to same network in a new status window, after making sure your nick == $mnick
Because you're trying trying to connect using a nick that's already taken, mIRC then tries to connect as if you want your nick to be (optional), which generates a confusing error message when the server tries to tell you that:
(optional) Nickname is unavailable: Illegal characters
I suggest not telling the user that the alt-nick is optional, since leaving this blank can often lead to coming back to the client to find it just sitting there with "/nick " in the editbox. The /help could also clarify the 'someone is using your main nickname', because as it reads now users think this means 'someone else', when in fact the vast majority of the time I've ever encountered this problem when connecting, the 'someone' was me due to reconnecting before the network realized my prior session had timed out.