what did you find in the law book?
Bloody hell, ddjamo - the guys first post ever and you tell him we can't be bothered to save him the effort of looking it up? Shame on you!
Welcome Wedgie - I'd guess ddjamo's blood sugar levels are a bit low: he probably hasn't finished his 30th breakfast pancake yet! Feel free to wade in with whatever questions are bothering you - the Yanks don't have to answer if they feel a newbie shouldn't be asking questions that could be answered from a read of the law book (they're wrong).
The relevant law is 21.7. It says (where relevant) that the opposing players:
[LAWS](a) Must run from the mark. The opposing team must immediately run towards their own goal line until they are at least 10 metres away from the mark for the penalty kick, or until they have reached their goal line if that is nearer the mark.
(b) Must keep running.
Even if the penalty kick is taken and the kicker’s team is playing the ball, opposing players must keep running until they have retired the necessary distance. They must not take part in the game until they have done so.
(c) Kick taken quickly. If the penalty kick is taken so quickly that opponents have no opportunity to retire, they will not be penalised for this. However, they must continue to retire as described in 21.7(b) above or until a team-mate who was 10 metres from the mark has run in front of them, before they take part in the game.[/LAWS]
So we see that your decision was correct, and the offenders were (at best) mistaken in their belief that a pass would allow them to get on with things without retiring the full 10m. I suspect, actually, that they were getting confused with law 11.3 (offside in general play):
[LAWS]In general play, there are three ways by which an offside player can be put onside by an action of the opposing team. These three ways do not apply to a player who is offside under the 10-Metre Law.
(a) Runs 5 metres with ball. When an opponent carrying the ball runs 5 metres, the offside player is put onside.
(b) Kicks or passes. When an opponent kicks or passes the ball, the offside player is put onside.
(c) Intentionally touches ball. When an opponent intentionally touches the ball but does not catch it, the offside player is put onside.[/LAWS]