Did you use "Heat n Bond" Lite? There are two kinds, Ultra and Lite, the Ultra is not for machine sewing, and will gum the needle up, or worse break the needle. I have a whole whack of the Ultra, ordered some and they sent me the wrong type, so it's sitting rolled up under my ironing table because they were going out of business and I couldn't send it back.
The Lite is what you use for applique you want to stitch. It's the purple label, not the red. :) I use the Lite all the time and have stippled my applique, top stitched it, did blanket stitch around it and never had a problem. :)