I think i also came across that message in the past during mixing. I seem to remember that specific message disappears after a new block is found. So you could check this by opening monitor in your wallet
and see if "Collateral not valid. Will retry..." disappears, once a new block is found. I suspect the input amount is locked and then released again for further mixing, when a new block is found.
Its just a theory of mine, i could be totally wrong here.
Collateral must have at least one confirmation to be valid. If you have only one collateral in your wallet and you just now paid collateral payment tx (say 0.004 -> 0.003) then next mixing MN will consider it as invalid until it get one confirmation.