Did they say that with a straight face? I can't believe that would be serious advice! "You literally need to contact everyone in your address book and make sure they have the right settings."
That's because, like Hacker News, there are a relatively small amount of people who actually submit when compared to the number of people in the community as a whole. I personally subscribe to quite a lot of startup newsletters and follow people on Twitter who post product-related news, so I tend to have things to post most days. I assume it's the same for other people who also post on a regular basis.
People will use it for different things. Some will submit products, some will upvote, some will comment and get involved with the discussion, and some will do all three.
I don't know why your submission wasn't visible (you might want to contact the PH team directly about that), but with regards to your point about the startups trending that have existed for months: it doesn't matter when you launched, it matters when you were discovered by someone who uses PH and then decides to submit you. All links are hand picked, but they're hand picked by members of the community, then voted on by the community.
I think a lot of this won't be dependent on whether or not the submission is for a YC company, especially since the submitter is often not associated with the product being submitted anyway. I do agree with you about the practice being part and parcel of the startup world though!
I think trying to promote your YC startup amongst your fellow batch members is different to asking the tech community as a whole to vote for your product. Perhaps "founders told each other to upvote their products" wasn't the best way of phrasing it, but I imagine it was more like how you'd ask those closest to you to give you a bit of support.
With regards to the conflict of interest, I don't see this being too much of an issue. Whilst PH itself is part of a YC batch, the majority of the PH community won't be, and it's them who collectively vote.
https://goo.gl/forms/YIiYFCxhD8niiF1w1