I have successfully used the top one (mortar mix) for decades.
Of course it has to be wet enough to move around, but it should be as dry as possible, i.e. not a slurry You should be able to form peaks.
We leave space between chunks so that the mortar has room to spread. Of course, it is ideal to have eyes on the open space and pack it in from open sides, but you don't always get such an option on remodel work.