And after some googling, I got the real midrash. It is a gemara in sanhedrin:
http://hebrewbooks.org/shas.aspx?mesechta=24&daf=39b&format=pdf
The gemara begins by citing a pasuk about when ???? was killed. The passuk says: ?????? ???? ?????.
The gemara comments that this is the rinah which was referred to when the passuk said ????? ????? ????.
The gemara then asks that we find that Hashem is not happy when reshaim die, because He would rather they do teshuva. The gemara cites two proofs to this, one of them that Hashem did not want the malachim to say shira on the yam suf.
The gemara responds: ??? ???? ??, ??? ????? ????- Hashem is not happy, but people are happy.
Thus the Jews are supposed to be happy when ???? was killed, and when the mitzrim drown, but Hashem himself has a different perspective. This explains the contradiction.