I'm having a similiar issue with my first felting experience, except the garter edges felted fine, but the inner stockinette still has lines.
It was in the washer, agitating, for about 45 minutes and it still isn't "solid" like I wanted.
Mine is a no name wool I bought off ebay, so I don't know if it has anything to do with the Malabrigo.
Here's the pic:
You can kinda see the ridges. If I stretch it at all, then I can see through the fabric.