No you did nothing wrong just used a sub standard product.Adhesive and grout in one are not very good,its either one thing or the other and will always struggle to be both.
Was the wall surface dust?This won't help the adhesive so I always prime walls with acrylic primer.
I've used the cerafix tub adhesive from B&Q many years ago and found it to be ok.Also the cerafix powdered grout is not bad either.
The crap product aside, the main reason why it ain't sticking is cos you used PVA on the tile base in the probably the worst possible scenario of a painted wall - DO NOT USE PVA OVER A TILE BASE . I'm now even beginning to bore myself with this one
Scrape it all off & start again with some decent trade products
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