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I think Split is confused by being given the same separator character twice...
While the Help isn't as clear as it could be, Split isn't meant to work with a single separator consisting two or more characters. It's meant to work like the formula @Explode function, where each character in the separator argument is treated as another separator.
Re-read this part from the Help, noting the section I've bolded:
delimiter
An optional scalar String containing the characters to separate substrings. If delimiter is not specified, then the space character " " is used
Basically, it's trying to treat your S="##" as two separators, and apparently can't handle the fact that both separator characters are the same.
If you want "#" as a separator, just use one, like S="#".
If you must use a 2-character separator, write a custom function to do it instead of using Split.
Feedback response number SLES87C2K7 created by ~George Umboosicheketsi on 07/14/2010