voluntary release

[JJ]

Sorry, but you didn't explain this situation very well. I will assume a few things and give you some direction.

You say "...short who secures ball and makes tag on the runner". It sounds like the had the ball securely in his glove and made the tag, and THEN lost the ball. If he had the ball, made the tag, and then lost the ball, you have an out. If the ball was not secured when he made the tag, then you didn't have a tag, so you didn't have an out.
That's the logic I would give the coach who came out to argue the play. Of course, since the ball ended up on the ground, it looked goofy and anytime there's a play that looks goofy odds are someone is going to question it.

Here's another "sort-of" related play - Runner on first, batter hits a double play ball to the shortstop. He flips to the second baseman for the first out, and after touching the base the second baseman is dumped (legally) by the runner sliding into second. The second baseman hits the ground hard and drops the ball. Remember, all this happens bang-bang. Do you still have the out at second base? Answer - if the second baseman had the ball securely when he touched the bag, the runner is out. He lost the ball AFTER he touched the bag. In your case, if he had the ball securely when he tagged the runner, the runner is out. He lost the ball AFTER the tag.

Now, if either of those fielders NEVER HAD CONTROL OF THE BALL when they made the play(s), that's a different baliwick. Good word.

JJ