mmmm not sure what you have done there Renstar. mmmm you need to have all 3 layers sewn together before the elastic goes on. So have your Middle layer on the table then lay your inner layer on top with the right side facing up then place your outter layer on top of that with the right side facing down. Sew it together leaving a hole big enough to put your hand in.
Now before turning it right way out, add your elastic. Once your elastic is added turn the nappy right side out. then sew your hole closed.
I might make a little video & add it too my blog. Might be fun LOL.