Geez thats a lot to take in when I'm overtired! I'll do my best

One paw paw cream is ok - the yellow one - not the red. For any other creams, use a liner. Or be ultra cautious like me and use nothing but moo goo cream - they are fine with cloth. Preventing a sore bottom - hmmm... if they are new nappies that have been washed from all manufacturing residue, it might be a case of your bub getting used to the different materials. I know DS and DD went a bit red at first because it was different than the sposies.

WIth the inserts - I always used both inserts. Are you using the newborn fold still or not? You can use both inserts in the newborn fold too.

I use wool covers at night (not the baby beehinds ones though) but ones like longies, shorties, soakers, much better than PUL at night because wool breathes - better for their bums.

Terry flats - I always used the pad fold for my kids. Google nappy lady UK and she has different folds and recommendations on her site.

I don't know if its a problem with them being big and bulky ? If you don't like the look of them, go for slimmer fitting nappies - ie, a sized nappy, rather than a OSFM because they will always be bulkier.

Did I cover everything? LOL