He didn't follow their advice and continue to wonder around the school with it, not obeying other instructions, which could be seen as suspicious.
You don't arrest people because you're suspicious. This culture of fear is a terrible thing and it really needs to stop.
You see a kid with something that might be potentially dangerous, you approach him and ask him, "what's that?" He shows it you, tells you it's a clock. You look at it, you let him explain it to you. At that point, you said, "cool" and leave him alone because it's clearly not dangerous. There's no reason he should put it away, there's no reason he shouldn't have it on him. The next person who sees it and is concerned should simply follow the same procedure and ask.
Doing anything beyond that is completely unjustified. If he tried to pass it off as a bomb, that'd be another thing, but everyone who asked was told it's a clock. He deserves a settlement for the shit he was forced to go through. I don't know about the amount, but that's all up to the lawyers.