Thanks for the review. Sounds less than stellar.
The only HI I have stayed in Indonesia didn't have free internet access either (HI Bandung). I would say it is very, very much the exception rather at hotels in Indonesia generally.
I don't really get the comparison with Penang. Penang is much less touristy than Bali, so if you didn't want to be hassled by itinerant vendors, then it would have been a better choice.