infamousk12, what you did was quite all right. That is what the case instructions tell you to do. What they don't tell you is the why? part, and that's because it is a bit complicated.
The Hub supplied with the NZXT case can control both 3-pin and 4-pin fans. It does this by using a PWM signal from a mobo fan header to create its own group of 3-pin fan ports that operate in Voltage Control Mode, not PWM Mode. Voltage Control Mode is the only way to control 3-pin fans. And because of the backwards compatibility design of the newer 4-pin fans, they also can be controlled by this system. (It's not quite as good as proper PWM Mode control for 4-pin fans, but it still works well.) This simplifies life for many people because so MANY cases now come pre-fitted with 3-pin fans (like the NZXT case), but so many mobos have 4-pin fan headers.
The problem that has emerged is that many (but NOT all) mobo makers also decided to use that backwards compatibility feature to simplify life for their users. So, although they place 4-pin fan headers on their mobos to keep people happy, many of those headers actually operate only in 3-pin style Voltage Control Mode. This means they do NOT provide any PWM signal on Pin #4, but any Fan Hub can ONLY work if it is using 4-pin PWM Mode. Or, in the case of this Hub and one other, the Hub MUST have that PWM signal as an input to do its own conversion work and create 3-pin fan output ports. For the user, this makes things more difficult because it is hard to tell whether your particular mobo has these "fake" 4-pin fan headers, or whether they really are 4-pin headers using true PWM Mode.
So the solution from NZXT (and another maker of a similar Hub) is to instruct you to plug the Hub's fan connector into the mobo CPU_FAN header only. Then you must connect your actual CPU cooler system to the Hub's Port #1 so that the speed signal from the real CPU cooler can be relayed to the CPU_FAN header for monitoring. Why do it this way? Because even those mobos that use those "fake" 4-pin headers for their CHA_FAN or SYS_FAN headers always do real 4-pin PWM Mode control on the CPU_FAN header. Or, very commonly, they make PWM Mode the default there, and allow you to change that to Voltage Control Mode if you need it for using a 3-pin fan on your CPU. This way, you can be guaranteed that the Hub WILL receive the PWM signal it must have to work, and all your fans can be under mobo automatic control.
The small weakness of this is that mobos have TWO automatic control systems for a good reason. Each uses a temperature sensor to measure the actual temperature of a component, and then adjusts its fans to cool that component to the temperature target it needs. One system uses a sensor built into the CPU chip itself, and that system runs the CPU_FAN header and its fans. The other system uses a temp sensor built into the mobo by its maker, and that system runs the CHA_FAN or SYS_FAN header(s) that cool the case interior. Ideally, you would connect your CPU cooler to the CPU_FAN header, and all your case ventilation fans to the CHA_FAN or SYS_FAN headers for this to work. But given the potential for confusion and malfunction that results from the different header and fan types, the Hub's instructions result in having all the fans controlled by the CPU_FAN header, which is based on the internal temperature of the CPU. While that may not be ideal, it certainly will deliver good cooling to all your system.
It happens in OP's case for this thread that his mobo has CHA_FAN headers that can be configured to work in either PWM Mode or Voltage Control Mode, and their default setting is Voltage Control. OP set up hjs system with the Hub connected to one of these, but the default header configuration was not providing the necessary PWM signal. My advice was to adjust that configuration to ensure the CHA_FAN header used for the Hub would provide it exactly the signal it needs, and based on the mobo temperature sensor.