Why am I not getting any smoke out of my smoking pouch?
It is possible that you didn't poke big enough holes, or that the heat from the burner was not enough to cause the pellets to smoulder. You need to place the packet on the burner directly (actually on the rack above the burner, removing the diffuser), not on top of the diffuser (see Step 2 in these Step-by-step instructions). One way to test would be to fire up your grill, place a packet on the grill and visually check what setting you need to use to see smoke coming out of the packet.
Hot smoking is usually only done for a portion of the whole cooking time not the whole time. Generally you only need 30 min to 1 hour of smoking at the start, along with a long slow (~225 F/~110 C) cook for the rest of the time.
Also note that the temperature on the grill thermometer in the lid is not measuring the temperature at the cooking surface. The temperature on the lid is an indicator of the heat inside the grill at the point of the probe only!  Ideally for smoking/slow cooking you need the temperature measured at the meat. This is especially the case with gas grills as they are not well sealed (won't work if they are), so a lot of the heat and smoke escapes out the gaps, but the probe is usually near the top of the lid, where heat accumulates.  If you are inexperienced at smoking I wouldn't be too concerned about fine temperature control at this point - a little too hot at the start shouldn't matter too much in the long run.