Re: Gym etiquette / policy / whatever
The towel / bottle is a sign that the machine is taken. However, some abuse that greatly. There is one lady at my gym who will put her stuff on her favorite treadmill, then go and do a 30 minute workout on the weight floor and come back to "her" treadmill. I have been known to move her stuff and use that machine just because I can't stand people that think they are entitled to stuff in a public space.
In your case, I would have done as you did. However, when approached, I would have given the machine back ONE TIME. If it regularly happens that some one is "holding" their machine, then that person loses all gym etiquette from me.
The shot you don't see coming is the one that takes you down!