On party im in this super bounty and get all in preflop with 2 other people. one guy has 700 and me and the other have 3500. The end result was that I beat the big stack for side pot and the little stack won the main. The bounty was paid out to the other guy and not me. Does this seem right?

That's beyond messed up. You knocked out the 3500 stack. You get that bounty. 700 stack knocked nobody out and gets nothing.

another pretty questionable rule

Don't expect much from support. They are already the worst in NJ.

When determining winners, the side pots are done 1st leaving the bounty to go to the main pot winner.

the guy who won the main pot and only had 700 chips cannot knock out someone who had 3500 chips, he therefore cannot get the bounty.

OP should have gotten the bounty

I guess it depends on house rules, as I see it both ways when googling it.

Anywhere that the 700 chip guy gets the bounty is 100% wrong. If what you said in your original OP was correct, the bounty should obviously go into the sidepot since your bounty chip would theoretically be the last chip you would put into the pot. He'd match the 700 in the main and the rest in the side which is where his bounty would go.

This is pretty disgusting; I certainly won't be playing a bounty on this site until this gets fixed.

I think you are misinterpreting the rules. I have not seen anything that states that someone other then the person who has the other covered.

I couldn't find anything for party but this is from bwin. So there is definitely a difference of opinion between sites.
"Get paid for eliminating other players in our new Bounty tournaments.

We'll take part of every buy-in and put it towards a bounty for each player. Bounty amount taken is a configurable parameter. For example, we could take $2 of a player's $10 +$1 buy-in to create their bounty, with the other $8 going towards the prize pool. You’ll claim the cash if you knock them out of the game: we'll credit the bounty to your account immediately.

Please note that bounty prizes will only be paid based on the main pot and not based on any side pots."

They are the same company.