I made the same mistake with these RotK conditions, thinking all minions automatically got assigned to Gandalf. But Thran is right, assignment actions can only assign unassigned minions and companions.
The reason it got banned is the Regroup loop it causes, healing everyone. Very few Shadow decks can throw out the damage in one turn without some setup, which this loop demolishes.
The x-list is for INFINITE loops, this is one of them.