Pence warned that the world would see "a charm offensive by North Korea" on Friday.
At a reception before the ceremony, Pence and Kim Yong Nam were in the same room, according to Jarrod Agen, his deputy chief of staff, but Pence "did not come across the North Korean delegation" at the event.
"We will not allow North Korean propaganda to hijack the message and imagery of the Olympic Games", Pence said.
In a meeting with the South Korean president on Thursday, Pence said the United States will continue to put maximum pressure on the North until the reclusive state comes to the dialogue table to discuss its "permanent" and "irreversible" denuclearization.
North Korea has said talks with its southern neighbour were "warm" but made no mention of inviting the South Korean president to a summit.
And while this seemed far fetched, there was an olive branch of sorts extended to North Korea with leader Kim Jong-un's younger sister, Kim Yo Jong, making an unprecedented visit to the South.
During the 2000s, the two countries' athletes marched together at the opening and closing ceremonies of several worldwide sporting events, including the 2000 Sydney Olympics. "And to recognize that whatever images may emerge against the powerful backdrop and idealism of the Olympics, North Korea has to accept change", Pence told reporters at a South Korean naval base before heading to the Olympic Games venue.
Otto was arrested in North Korea in 2016 on suspicion of stealing a political poster and was sentenced to hard labor by North Korean authorities.
Mr. Moon, who wants to harness the Olympic spirit to pave the way for talks over the North's weapons programme, warmly shook hands with both Kim Yo-jong and Kim Yong-nam. However, the U.S. Treasury Department past year included Kim Yo Jong on its list of blacklisted officials over her position as vice director of the ruling Workers' Party's Propaganda and Agitation Department.