Most bakeries use cake yeast. Is that what you bought?
To get good results with bread machines, you should probably be using yeast made specifically for bread machines. It usually says this on the label, though sometimes it just says "rapid rise" or instant yeast.
Bread machine yeast has finer granules than regular active dry yeast. It will proof easily when hydrated with other dry ingredients. It also sometimes has ascorbic acid (vitamin c) added.
This may or may not be your problem, but I thought I would throw it out there. It sounds to me like you're just not getting a good rise, and often that comes down to a problem with the yeast or the gluten content of the flour being used.