Varela is apparently at least somewhat embarrassed that Manos Limpias plagiarized most of his own ruling for the contents of their indictment against Garzon.
I think the original plan was that Manos Limpias was going to do a reasonable indictment, to which Varela would say "hmm... this sounds serious, I guess the only way to know for sure is to go to trial".
Unfortunately for Varela, the indictment that Manos Limpias actually submitted was full of crazy allegations and was completely unusable. So Varela told them to please take all the crazy shit out of the indictment, but only gave them 24 hours to do it. Continuing their obvious stupidity at blowing their first chance to indict Garzon, Manos Limpias then did a whole-scale plagiarization of Varela's findings and submitted that as the indictment. That put Varela into an impossible situation, since he couldn't really rule on the validity of his own rulings.
My guess is the Supreme Court will just dump the whole thing and charge Garzon on the basis of the Santander allegations instead. The main advantage of the Santander being that most people don't understand what the case is really about, and most likely the foreign press (whom the Supreme Court seems to really care about impressing) wouldn't be able to bring Franco into the picture.