Response from shelter: So glad to hear she's fitting in, with only this one adjustment "glitch"! It's definitely possible she is confused by either the litter or the box; at the shelter, she always used the box, but there really was no other option, as there were just litterboxes (we use fairly short-sided boxes for the kittens, with clay cat litter) and hard floors, no towels or squishy-feeling stuff to use as an alternate surface. (The kittens get "hammocks" that they lie in, but they never seem to be tempted to use them for litterboxes).
So, I'd recommend trying first with a low-sided uncovered litterbox with regular clay cat litter; once she is reliably using that again, you can begin mixing in some of the clumping litter (make sure it is unscented - sometimes the ones that have a heavy perfumed smell are really abhorrent to a kitten). At first, mixing in the clumping litter will, of course, negate its clumping effects, but you just want to get her used to that feel under her paws. Then you can switch over to all clumping litter, and once she's reliable with that, you can even add a cover to the box if you want.
I've attached our info on kitten litterbox challenges; I am confident she will adjust soon! Just by her choosing the towel under the box indicates she knows she is SUPPOSED to use the box, there is just something about it that is causing her to avoid it right now.
Hugs to Arwen from us!
Thanks I suspect the smell of the clumping litter is throwing her off. The little box is the low and uncovered kind. Today I'll get some regular clay unscented stuff and put that in her box instead.