I'm doing that pattern in the class at my local shop right now and was experiencing the same problem. I am no however, using the battilizer, but instead using no show mesh and warm & soft combo. I was having spreading problems too and thought my almost new machine might need service. But during the last session, we tried different needles and found that switching to the Microtel needle worked for me - I see that didn't help you though. Hmmm. I am using Kona Cotton though, so my fabric is different.
I also think that the fact that I used some adhesive spray to hold the back on so it wouldn't get messed up while setting up might have contributed to my problem.
Good luck - don't really know what to say, since my problem was resolved with a needle change. I'm using Floriani Polyester thread, by the way.