There is a great description of how to make terry-towel wicks at:
http://www.geocities.com/firepoi/construction.htmlHowever, I have had similar experiences to the author: I'm lucky to get 3-4 burns from a set of terry-towel wicks. It is also important to note that you *must* extinguish them with a wet towel as the fuel burns out. If you don't, they will desintegrate the first time you burn them. It is also important to know that they will continue to smoulder *long* after they are extinguished, and while they are smouldering the material is also desintegrating. The only way to stop them from smouldering is to dunk them in water or pure kerosene/lamp oil. *NEVER* resoak terry wicks in anything containing white gas or charcoal fluid or you will almost certainly set your fuel dump on fire.
Those are the things that you can control. What you can't control are the little bits of towel that go flying when you spin them. If you are gonna use terry towel, be very careful that this is going to happen.
As you can tell, I'm not a big fan of terry-towel wicks. They are convenient if you happen to be doing a lot of travel and don't want to worry about losing a set of good kevlar wick. For general use, though, it is really worth the $10 - $15 bucks to splurge on some kevlar wick.
-p.