How can I make mortar adhere to smooth flagstones?
Sorry but Tyler Durden is talking pure imaginative theory with no practical substance. Install drainage, which drains to where exactly. Install gravel and sand and put walls on it? Gravel, the roll around stuff? And sand the soft stuff? 

Still sound like something you want under your walls? No. 

Sure dry stone walling stands the test of time, provided there are zero, and I mean zero side thrust loads applied to the wall, ever. And definitely means no soil. 

Mortar helps the wall absorb loads by simultaneously sticking the units together AND holding them apart. Probably the reason the mortar didn't stick (assuming you have proper/suitable mortar) is that your slabs were dusty/dry and the mortar was probably too dry. 

To cure: Wash all dust off the slabs with a hosepipe and allow the surface water to soak in (the slab will still look dark/wet).  Mix the mortar using enough water to make a smooth, creamy mix that doesn't crumble. 

Lay slabs using the nice and creamy mortar and tap into place, remove excess that squeezes out with a trowel and once the mortar has hardened off a little, tool it off with whatever finish you want (half round, struck with a trowel etc). Joint thickness shouldn't be too thin, aim for 10mm, give or take a few mm's either way.

At the end of the days work, cover down with fleece (or old blankets) and a layer of polythene. Keep 'green' mortar covered thus for a week or so. 

At least thats how we lay brick/block/concrete stuff in the UK/EU...