Allen had said this because Igneel was currently only a Dragon Seed. It could indeed use the Dragon Seed to temporarily give itself a physical body, but that was a one-time process. Once used, it was gone. In the original story, even without Acnologia, Igneel would eventually have perished.
Through Igneel's explanation, Natsu learned the source of the current problem. He immediately thought of his most respected Brother Allen and wanted Allen to find a way for these Dragon Kings to regain physical bodies.
Allen did have a solution: he could transform the Dragon Seeds created from these Dragon Kings into Digi-Eggs, then have Natsu and the others hatch them. That would essentially allow Igneel and the others to live again. Although they would lose all their former power, after becoming Digimon, their lifespans as Dragon-type Digimon would make them long-lived species. However, transforming them from Dragon Seeds into Digi-Eggs required far too much data and magic power. Allen could indeed accomplish it, but Natsu and the others insisted that they had to do it themselves!
The final plan was for Natsu and the others to provide the magic power, while Allen supplied the data.
However, according to Allen's calculations, transforming a single Digi-Egg required at least Shield-level magic power. For the newly graduated Natsu and Gajeel, this was undoubtedly tremendous pressure. That was why they had been spending all their time in the Trial Magic Circle.
Natsu, who had just seen the guild's latest announcement, became excited when he heard Allen's words. "Of course I want to become an S-Class Mage as soon as possible! That's why I've been spending all my time in the Trial Magic Circle..."
Natsu had not finished speaking when Allen interrupted him. "You've been in the Trial Magic Circle the whole time without earning