Reply ‘no position’ while the job posting is still there (‘HiWi’ position in Germany) I am third year undergraduate and I am not studying in Europe.
I plan to apply for a master at a German institute by the end of this year which is the time for application.

This institute advertised a ‘Hiwi’ (student assistant) position on their website.
They link to a PDF file which provides more detail, and in this file they refer to the job as ‘student assistant position’.

I wrote them an email asking about this position. But the group leader replied to me: ‘I could not offer you a position at this point’. This makes me a little confused. I know group leaders face many quite complex situations, but I don’t know how to interpret this. Is it just because he think I am not good enough at the first read of my email and make a polite refusal?

I did not mention that I intend to apply at this university and also that my main motivation is to get research experience (i.e., I am okay with not being paid). Should I mention these two points?
Student assistant positions in Germany are usually open only to students enrolled at a local university (often where the position is offered, but always in Germany). This is for reasons of social insurance and labour regulation. 

You are not enrolled at a local university. In fact, you are studying outside Europe.