It did work exactly as it should, @DoubleSente.
Quoting SL:
Before the First Round
Order the field of players by strength. Divide the field into bands of players based upon number of rounds and the distribution of players strengths. […]
Dividing the field means setting up the McMahon bars. You chose 20k and 10k, respectively, as bottom and top bars, meaning that: a. every player ranked 10k or higher was placed in the top group; b. every player ranked 20k or lower was placed in the bottom group; and c. all players ranked from 19k to 11k were placed in bars corresponding to their ranks (19k players in the 19k bar, 18k players in the 18k bar and so on). This is the resulting division for your tournament:
List of Competitors
Top Group (Initial score: 0)
- gugamircea
[2k] - RikoParis
[2k] - yegorister
[2k] - havefun
[3k] - VPshunt5
[3k] - tikka
[4k] - DoubleSente
[5k] - Kame Sen’nin
[6k] - Невероятный АЛК
[7k] - Mudksip000
[7k] - Farnham
[8k] - He Who Walks in Shadows
[8k] - Midboss
[9k] - huangyunict
[9k] - Maxis
[10k] - Oppilas
[10k]
11k Bar (Initial score: -1)
- Comrade SeeRed
[11k] - orangeagent
[11k] - ysatcho
[11k]
12k Bar (Initial score: -2)
- pmurk
[12k] - unicycleOLI
[12k] - Dimago
[12k]
13k Bar (Initial score: -3)
- IBa
[13k] - DerMannMitHut
[13k]
15k Bar (Initial score: -5)
- SebastianKenne
[15k]
17k Bar (Initial score: -7)
- Julko
[17k]
Bottom Group (Initial score: -10)
- Cozy
[25k] - BlueFalcon
[22k]
Then you set the number of rounds in a way that effectively asked the server to generate a tournament in which it would be possible for players in the bottom group, starting with a negative score of -10, to get enough points in only three rounds to overtake those starting with the default score of 0. So, it delivered just that.
I believe a way to make a McMahon tournament work the way you had envisioned, with a small number of players, would be setting the bottom/top bars to 10k/9k and increasing the number of rounds as much as you reasonably could.