How did 'Classified' get so messed up?

Nothing is classified as "Classified". Things (generally information) are classified at some level, say as "Secret", "Top Secret", plus perhaps "NOFORN", "SCI" or "SAP" etc. When talking about some information and trying to indicate it's not to be discussed openly one might refer to it (the information) as "Classified".

OK: "Hey, what's the top speed of that new jet?"

"Sorry, that's classified."

Telling someone some information being asked about is "Top Secret", etc., is against the rules. So one must simply say, "It's classified". In other words, the actual classification is classified.

Not OK: "Hey, what's the top speed of that new jet?"

"Sorry, that's Top Secret."

The very fact that the info is "Top Secret" rather than simply "Secret" indicates a higher level of sensitivity, which could be interpreted as meaning that's one really special jet.