In the intro quest, I had a spell that let me teleport an enemy 3 spaces. My dwarf was within 3 spaces so I thought that was perfect, but it would only let me move them 2 spaces toward the dwarf.
It would be easier to figure out what happened if we knew which card it was. It's entirely possible the destination square had to be within line of sight, and further squares were either blocked by something or out of range. Do you remember the name of that card?
I'm guessing it's Teleport Other as I recall that being around in the Greenfang intro, also fits the description. Hard to say why it didn't work unless LoS was an issue like Unlucky Scarecrow suggested.
Teleport Other looks to be it. I thought the map was all open or at least the center area where the action was occurring, but I don't think its possible to go back and play it for me to verify/recreate.