Report: Senators were instructed not to trade Hoffman within the division
It's uncertain who exactly was making these demands to general manager Pierre Dorion, but based on the team's organizational hierarchy, it becomes quite clear that it was owner Eugene Melnyk.
The Senators apparently wanted players in return for Hoffman, not draft picks, so it's unclear whether a deal between Ottawa and Florida would've worked out. Also, it remains unclear whether wanting players instead of picks was Melnyk's or Dorion's call.
Regardless, the Sens probably would've received a better return for Hoffman had they not ruled out a quarter of the league as a possible trade partner.