I would think that no smoking means no smoking. Either nicotine or water vapor. With every puff it light up and then you expel a cloud of water vapor. I would find that distracting. I think it's proper that someone pulled you aside to let you know that.
That said, I'm a cigar smoker. Even in places you can smoke people find them offensive. If I'm doing something offensive and its bothering someone, I should stop, plain and simple.