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H1B, H4 Visa

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H1B Visa stamping: Blue Slip AP at Chennai Consulate
I had recently went for H1B Visa Stamping Interview at Chennai consulate on December 2nd, 2019 and VO asked me the basic questions and handed over the blue slip and returned my passport back to me. VO did not ask me to submit any documents.

I was changing my status from F1 to H1B. What are the implications on this? Any inputs please? I am bit worried and scared not sure of what to do.

VO checked on this option in blue slip "Your application is refused for administrative processing. The application will be reconsidered when administrative processing is complete."

I am working as a contract on EVC model. At the end of Interview, VO collected the Client letter and gave me that blue slip asking me to apply for a new passport as it is not in good condition. By the time you get your new passport, hopefully administrative processing will be completed.

Should I need to go ahead and apply for the new passport? I am just worried because I will be get a new passport number. And my new petition is with the old passport number.

Can someone please advise me on what to do? I am bit worried due to the uncertainty.
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