This happens because Magento limits status length by default. To fix the problem concerning Order Status extension, please execute the following 3 queries to your database:
ALTER TABLE `sales_flat_order` CHANGE `status` `status` VARCHAR( 196 ) CHARACTER SET utf8 COLLATE utf8_general_ci NULL DEFAULT NULL ;
ALTER TABLE `sales_flat_order_grid` CHANGE `status` `status` VARCHAR( 196 ) CHARACTER SET utf8 COLLATE utf8_general_ci NULL DEFAULT NULL ;
ALTER TABLE `sales_flat_order_status_history` CHANGE `status` `status` VARCHAR( 196 ) CHARACTER SET utf8 COLLATE utf8_general_ci NULL DEFAULT NULL ;
After that please flush cache storage.
See more details on Order Status page
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