I think you need to plant it as soon as you see the root poke out. 1/2" in the towel is too long.

If you DO catch them in time remember to plant them ROOT UP. When the root first pokes out it does a u-turn, so if you plant root down it just has to make two changes of growing direction before heading up. Of course at 1/2" it may be past that time so root down was right. Also do not pack the soil. I mean at all. When you water the water will do that for you. I don't cover then because I think they need the oxygen.

As for fertilization use none or ultra light.

Good luck