Without stating the obvious here, using a VPN is a requirement. This allows you to enter the network and “see” all the target boxes, disallows communication between clients (other players) and probably most importantly, keeps you from having to stage attacks from across the internet. Some ISPs don’t like people port scanning and exploiting public facing machines so the VPN helps bypass this as well.
If you’re not comfortable with using a VPN or it’s outside your scope, check out http://root-me.org. No VPN is required for their service and since they leave everything facing the internet you’ll be attacking closer to a “real world scenario”.
And to answer your last question, you weren’t. You were scanning clients inside your LAN. No VPN = No HTB.