One of the quilt guilds I belong to gave out those bags to each member last year on their birthday and it works wonderful. I have a high voltage microwave and it works wonderful in it.
Did you ever consider that instead of actually putting a potato in the bag than a damp paper towel may be the reason it burned. There is a reason they have settings on those machines. The setting is for the item stated and not a substitute.
I have heard no reports out of over 30 members that their bag did not work. Did you put batting with it and if so what type. They have a special batting for such things that go into microwaves and this one is called tater batting.
Since this was a kit you purchased does not matter if it said 100% cotton, it's possible it really wasn't or an inferior piece of cotton fabric.
Anyway I love the one I was given by the guild and use it often. Cooks alot better than what I use to use in there.