I used to rehydrate per the instructions, but i have just sprinkled on top for years and won't go back. It's easy when rehydrating to 1/ go a little warm and kill some or all of the yeast or 2/ to add another sanitation risk. I don't know how accurate your thermometer is, but it sounds like either a bad/old packet of yeast, or the actual temp you rehydrated at was a little high and you killed the yeast, especially since the packet of dry kicked fermentation right off. Use it dry, man.