Round table

zoog, it seems that's what happened in your situation. The stack of master gremlins was ready to join, but only for money - in the first case, you had enough. If you spent the money and had less than required, the master gremlins didn't join. And then, since your army was much stronger, they decided to flee - that's all the "magic"! The same would have happened in the first case if you had refused to accept them into your army.
In general, as I've noticed, diplomacy has some oddities that aren't fully reflected in the game mechanics: sometimes something happens that I don't understand; I just have to shrug it off and keep playing.