This is why I wanted you to do the reading before you tackled the car. Without the proper knowledge you can create even more problems.
First off, what kind of bonnet are you using?
Putting the MF towel in between the bonnet and car? You've got it all backwards here. As BW said, you want to apply the product with the buffer, work it in well until it is almost dry and invisible, then remove with an MF. The polish works in the application, not in the removal. Its an abrasive and you have to methodically abrade the surface to remove the scratching.
PLEASE PLEASE PLEASE do some research here. What happened was you used a tool and products that you didn't properly know how to use. I wouldn't expect myself to be able to build a house without learning how to do it first, and you shouldnt expect yourself to know how to do this detail without learning how. Throwing a hammer and a nail at some wood doesn't build a wall, and throwing a buffer and a bottle of polish at your car doesn't get it detailed. Its really not hard, and its a lot of fun but it is a skill and like any other skill, it has to be learned. Even if you have the car done by a professional, if you dont learn how to maintain it properly it will look just like it does now in no time flat. This is why professional detailers make a living. This takes time, it takes effort, it takes commitment and it takes patience.
Have you looked into some of the products that we reccomended for you earlier? Like DACP and SFP?
I agree with BW, lets get you away from the buffer for right now. What kind of MF towels do you have, do you have any 100% cotton towels? To start I would reccomend you use a 100% cotton towel folded into quarters, apply the product to a 12"x12" section and work it in, back and forth not in circles until it is almost gone from the paint. Then buff it with the MF (again, not in circles) and see what you've got.