The beginning of the article does a horrible job of explaining the big question. The Millennium Prize problem[1] is a math problem: whether the Navier-Stokes equations always have a solution with certain properties. Some possible answers to the problem would mean there are some physical situations where they don't produce any prediction at all about what might happen next, or they produce multiple predictions, or they produce physically implausible predictions. (If you have a strong math background, the official problem description might be interesting to you; it's a bit beyond me.[2])
The article does get around to explaining it better if you keep going.
it certainly seemed to me that no one was relying on N-S as an accurate predictor of motion (as you would a newtonian model of a ball rolling or something like that), but rather just as a first order approximation
Numerical methods for solving the Navier-Stokes equations are approximate and therefore diverge from the correct solution. The same is true for a ball rolling down an incline, but the inaccuracies are smaller than you would ever care about in the real world. What your colleagues were saying about the Navier-Stokes equations is that the numerical error was often large enough that the calculated solutions were known to diverge from mathematical reality in significant ways, and therefore seeing them diverge from physical reality was consistent with physical reality and mathematical reality being the same.
[1] http://www.claymath.org/millennium-problems
[2] http://www.claymath.org/sites/default/files/navierstokes.pdf