I believe the online system for booking the free night only lets you book 1 night at a time. To book 2 free nights in a row on 1 reservation you may have to call in. My friend ran into this problem in March trying to book his 2 free nights in Tokyo - when searching for 2 nights using the link under the 2 free nights, it wouldn't let him book, but when searching 1 night at a time, both nights are bookable.
I encountered the exact same issue trying to book the PH Milan. A quick call to the reservation # and I was booked for 2 nights with no problems. Interesting note: the reservation that shows up in my Hyatt online account shows 2 different rooms, Room1 for day 1 and Room2 for day 2 of the 2 day stay. I think Hyatt's system might be designed so that you (and they) have to book the free nights separately. Just a sample size of 2 but it may explain what others are running into.