I thought there were only two twists to spools. Regular American thread untwists correctly when the spool is in an upright position. European twists (crosswound spools) untwist correctly when the spool is in a horizontal position on the machine. Maybe this is the problem you encountered?
The other thing to consider is that machines require stronger thread. Many metallics cannot stand up to the wear-and-tear of going through the needle eye multiple times on the machine. That may be why the spool was labeled for hand embroidery only -- not strong enough, therefore likely to fray when put through the rigors of a machine.