Dropped 3rd Strike - Dead Ball?

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Runners were on first and second with less than 2 outs. Batter struck out, catcher dropped 3rd strike, runner started to take off for first not knowing she was automatically out. Umpire calls 'dead ball' since first was occupied. I was wondering if that was a 'softball only' rule as I'm new to fastpitch and base everything off of baseball rules.

In another earlier game, same situation and the catcher overthrows first(she did not know the batter was automatically out). Umpire told runners they had to return to their bases as of TOP. I'm assuming that was incorrect as well.