Since you have stated that both the applique fabric and the quilt block fabric were laundered, I am wondering what type of backing did you use on your applique pieces? I really like Heat N Bond Lite for all applique projects. It not only holds the fabric in place while the applique is being stitched down but it also keeps the fabric from fraying. Also, if a quilt is to be laundered frequently, I like to use a satin zig zag stitch to attach applique. A blanket stitch does leave space between the stitches that can fray. Another suggestion, I use tear away stabilizer on the back of all applique. This easily tears away from the applique areas that are not stitched down but does stay inside the stitches which helps to stabilize the stitching and hold it in place.