Originally Posted by Prism99

First thing I would recommend is *heavily* starching the flannel before layering. A 1:1 solution of Sta-Flo liquid laundry starch and water works well. I "paint" this onto the fabric with a large wall painting brush, wait a couple of minutes to make sure the fibers have a chance to absorb the starch, toss in the dryer, then iron with steam. What this does is stiffen the flannel so it is much less likely to stretch or distort while you are sewing. (It also helps to spray starch the top.)

You are basting with your sewing machine? Is this because you intend to hand quilt it? Because that is the only reason I can think of to machine baste. If this is the case, I would switch to water-soluble thread and work from the center out. A meander can actually cause less distortion than straight lines. I would reduce the stitch length simply because it's really hard to control a sandwich when the stitch is very large. Also see if you can reduce the presser foot pressure on your machine (some machines are adjustable, some are not). If you can't adjust the pressure, I would try switching to a "hopping" foot.