Question: I’ve seen it done in Harry Potter I just don’t understand when its okay to do it, like can I say something like “John walked away from the house and was now walking along the road” or not? When is it acceptable?

Answer: 
Think of "now" as a thumbtack that refers to a specific moment. That moment can be in the past.

Some examples:

> 
> Jane had been a student. Now she was a programmer.
> 
> 
> 

or

> 
> Jane looked up, drearily. Now, *now*, of all times, he was going to interrupt her?
> 
> 
> 

or

> 
> Jane ran round the house. Now the car was gone. Where could it be?
> 
> 
>
If English if not your first language the usage of "now" is difficult to fully comprehend. It has many nuanced translations but is most often used to mean "in this moment". It is also used to emphasise a statement.

"Now Daddy didn't take too kindly his only daughter dating a black boy."

"They put the homeless kids in cages, now that ain't right."

Your sentence is acceptable.