The condition is tested only on the local PC (the one where you press the hotkey).
If-blocks always nest inside Toggle-blocks. You can see how HotkeyNet interprets nesting of your definitions by pressing "Show loaded hotkeys."
With the current version of the program, you can't nest If-blocks inside other If-blocks.
If, Else, and EndIf can be used only in hotkeys, not commands. If you need to put them in a subroutine, you can use a hotkey as a subroutine in place of a command. Call the hotkey with DoHotkey.
It isn't necessary to write EndIf unless you want to add instructions that should always execute after an If-block.