* "The Red Balloon" was a short film, not a full-length movie. It was 34 minutes long, making it ineligible for the regular Best Original Screenplay category.
* The Academy Awards didn't have a separate category for short film screenplays until 1973. So, while "The Red Balloon" did receive recognition at the Oscars (it won the Honorary Award), it wasn't for its screenplay.
Therefore, the strange part isn't that "The Red Balloon" won the Best Original Screenplay, but rather that it won an Oscar for Best Screenplay at all, which is inaccurate.