You can do the first with separate reservations. It isn't really allocated to each night, rather just based on the total price (think of it as you selling points to Hilton for money which is then used to pay the bill)
Thanks. That was my assumption.
Without more details from the OP, it's hard to know what happened here -- but it sounds like the OP made a single reservation for X nights, and adjusted the slider to pay cash for Y/X of the stay, and thought he would get points back for Y nights -- thinking he paid Y nights in cash, and X-Y nights with points. When in reality, he paid for X nights with Y/X cash and (X-Y)/X in points. In other words, the system allocates Y/X across all nights in the reservation, and disallows points because the entire booking was a "Points & Money" booking.
Had the OP made two separate reservations: one with Y nights paid in cash, and one with X-Y nights paid in points, then he should have received points for the Y nights. If he made a single reservation using "Points & Money," I don't think there is a legitimate complaint here.