Me and my husband just bought a foreclosed condo. Seller was a bank in FL (we live in WI) that previously bought it from a sherifs auction.
The closing was a week ago. We paid cash, got the keys and already moved in.

Now our realtor is saying that the deed was rejected and we might need to resign new paperwork. I don't understand how could it possibly be and what it means. Since they already took the money. Are there any legal actions that can be taken?

First you have to find out why the deed was rejected. It could be something as minor as someone not having signed in the correct spot. Don't jump to taking legal action yet.

Also, contact your Title Insurance company. If there is a problem with recording the deed, they should be covering you.