you have not included the network mask used.
Assuming it' s /24 (=255.255.255.0), your hosts do not need to send traffic to your router (the FGT) - they can make direct connections. The FGT is not involved with this.
If you want to control traffic between 2 groups of hosts you have to have 2 distinct IP ranges, like 192.168.1.[0-127] and .[128-255], with a network mask of /25. Then the FGT has to route between subnets and your policy would have an effect.
"Kernel panic: Aiee, killing interrupt handler!"