That is correct; good to see you got there on your own. Logic chip outputs can have a "no state" condition, where both the pull-up and pull-down transistors are off. This is called a tri-state output, and is very common in memory chip arrays. But logic chip inputs do not like being unterminated or undriven. The want to see either a 1 or a 0, a high or a low, and if you don't give them a valid input they will make up one on their own, usually leading to a circuit error.
If you are familiar with analog circuit functions, your circuit is implementing a version of a differentiator. There is another variation that uses an XOR gate rather than an AND gate, but the result is the same.
ak