1. You can't use a mix of custom apps and google play apps in Kiosk Mode. You must choose one or the other.
2. If you have the requirement for both, then you MUST upload your custom app to Google play as a developer, and then add it back into SM
Now, the one thing that has just struck me: Have you actually installed the app on the device too? Without the app installed, it can't go into Kiosk Mode