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Todd is a member here.... started his business here... has the highest quality product on the market..... You can read about the pellets and his other stuff on his site....
You can use it in the pit as long as your pit temps are below 275. The tube smoker that Todd sells I have had good success with in the pit with temps up to 285.
Place the smoker on the end of your smoker opposite from the fire pot.
If you try and use it where there is flame, or briquettes, there may be a problem with lack of oxygen... Usually they are placed where there is plenty of oxygen and the smoke is piped into the meat area... I use a mail box mod to generate smoke and move it into the food area...
Try placing the AMNS in an area of the grill where there is fresh air.. maybe under the food grill by an air inlet if there is one.... I'm not familiar with pellet grills... I think I should look at the grills next trip to the hardware store.....
On top of the grate, next to the rear wall.
Only time I've had it go out, is when I didn't allow the pellets to burn long enough before blowing flame out.