Email from Hhonors CS agent said "we found the stay does not qualify for credit as it was deemed ineligible by the hotel". They asked me to contact the hotel for clarification.
Rang the hotel today, (got cut off twice for some reason). They checked and sent an email to me and Hhonors to say that my stay is eligible for points, so I should get the points for the stay.
Looks like some administrative error somewhere..at least it got resolved... just wait a couple more days and check the points go into my account.