Yes, it is/was in German airspace, in this case south-east of Frankfurt.
How could I tell, if it was a windmill?

I struggle with the same problem. Since it's a rental plane, I can only report the problem to the flying club and hope they would contact the manufacturer (which they won't just because of a single complaint).

While I understand and support the policy of rejecting bad data, I wonder if there is not a better way to handle it in Skydemon. As already pointed out by others, ending the navigation mode and thus forcing the user to deal with a technical issue in flight is not optimal.

When losing connection to the traffic receiver a manual fallback mechanism is provided. Wouldn't it be possible to use a similar mechanism in case of bad data? SkyDemon shuts down the communication with the device, displays a banner indicating that bad data has been received and therefore no location/traffic information is available. By acknowledging the banner, SkyDemon stays in navigation mode and temporarily reverts to using the device’s Location Services (if available). SkyDemon reconnects to the traffic receiver in the background and as soon as valid data is received, SkyDemon will automatically switch back. When the user intentionally ends the navigation mode (e.g. after the flight), a complete error message can be displayed.

Finally, this would still follow the reasonable policy of rejecting bad data (not tolerating/ignoring corruption) and the user would be informed (multiple times) of a possibly erroneous behavior of the traffic receiver. At the same time, the user would not directly be burdened to deal with it in flight, can keep navigating, logging the flight and no timers would be reset.