So, I've a year's LU travelcard and am entitled to get discount on some
overland rail tickets, as well as not having to pay for the stations
within the zone boundary of my travelcard.

This means I can't buy rail tickets from the automatic machines, because
they don't take this into account, so I have to go and see a proper
person to buy my ticket.

At an unmanned rail station with an automatic ticket machine, am I
correct in not buying a ticket and telling the ticket inspector that the
ticket machine was unable to dispense the ticket I wanted?

(And thank you to Connex, whos machine at the rail station I went on
tonight failed to recognise my £10 note anyway, so I couldn't buy a
ticket and thus enjoyed a free trip...)