There's no question this is the issue. In another thread, someone
identified the error preventing those characters from loading. It appears that it checks the license associated with the encounter library, and the HLO import can't reconcile the license from HLC while importing.
If you were to add your own characters to that encounter, it will import your original characters and skip those from the Encounter Library. There's been no update from Lone Wolf on when the importer might be fixed or Encounter Libraries added to HLO.