Yes, it states in Indiana DOR Bulletin #28, Income received from Indiana sources is considered Indiana income to nonresidents. There are exceptions but I don't think your income follows under one of these exceptions. read the section in the bulletin that addresses Income Received from Indiana Sources.
Part of income tax paid to Indiana may be a county tax that was assessed, in addition to the state income tax. Yuo can look on the Indiana It-40 NR on line 9 to verify this.
One saving grace, if you file an Illinois resident tax return, you may receive an Illinois Earned Income Credit, which would help make up for some of the tax refund that you expected to receive.
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