What kind of paper did you use?
I did a lot of 'throw-away' experiments at first to see how my supplies would work together the best. Not having bought any instruction on how to do bottlecaps, the information around here had a few little 'holes' that I had to fill in for myself.
I found that regular paper and cardstock wouldn't work at all because they're too porous and soak up whatever you try to seal them with. Either that, or if you use page pebbles liquid can still soak up under the very edge and run the ink on your design.
Photopaper isn't as porous and is stiff enough that it doesn't do that wrinkling up thing when it gets a bit wet. To keep the pics on the cap I use a double stick adhesive page I got at the local scrapbooking store and punch 1" circles of it. I put that on a cleaned cap, place a 1" cut out pic on top, and then lightly paint over the pic with clear nail polish (I have an ink jet printer, so the ink would run otherwise). After that's dry, I use the Envirotex Lite.
Hang in there! Be sure you do a bit of trash-talking so that it knows who is in charge.