You’d think merit scholarships would be merit only, but many have a need component, and many require the student to file the FAFSA/CSS to be eligible, so that excludes anyone not qualified for the FAFSA, like internationals.
I think the the college you quoted above wants you to apply for FA or show that you are full pay at the time of application. Honestly, I think they’ve been burned by students not applying for FA to get in, then expecting the school to come up with aid anyway.
If the merit scholarship is from outside the school, tell them that. It’s unlikely they’ll consider that as a way to pay without the scholarship being actually awarded. If you need FA, apply for FA.