That's what it sounds like. The development machine's front-end is not linked to the back-end that the distributed application is intented to use. You either need to attach the developer machine to the network and link to the back-end on the network before creating the installation setup OR develop a method of re-linking your front-end to the back-end. That way, regardless of where you developed, you could link to the correct back-end.
I recommend the latter for other reasons, too. Network gurus are always changing things - like building a new server or whatever. Including a means to re-link your database greatly improves the versatility of the application from the standpoint of back-end location and possible future modifications to the back-end.
There is one other way to salvage what you have done. On a machine that is connected to the network and has MS Access installed (Developer's Edition not necessary) - open a copy of your front-end MDB. Link it to the back-end on the network and then create a MDE. Copy this MDE to your setup file set. This way, the MDE in your setup will be pointed to the network back-end and not to the back-end currently included in your setup. This will only work if all users machines have the same network drive mappings or if you use UNC.