Can I steal a creature then block my own attack with it?
Your opponent was correct. Only creatures controlled by the defending player may be declared as blockers. "Control" doesn't just mean "you decide what it does", it means you control it just like all your other creatures. It's on your side of the battlefield now (temporarily).

But there are still an awful lot of nasty things you can do with a card like Temporary Insanity. For example:


When your opponent attacks you, you can steal one of their creatures and use it to block another of their creatures. (Temporary Insanity is an instant!)
You can steal your opponent's creature and use it to attack them. (Even better if they have to block it and/or kill it to stay alive!)
You can steal your opponent's creature and sacrifice it, if you have a way to do so (for example if you have a Butcher of the Horde).


And plenty of other things - those are just among the most common.

The only way you can force your opponent's creatures to block your attack is with cards that explicitly affect how blocking works. For example, Lure forces your opponent's creatures to block a specific one of yours. Or Brutal Hordechief will let you entirely choose how blocks happen!