What appears to be the problem with the quilt? Is it loose strands of thread (if so wash it again and again until those are all gone)? Or is the flannel pilling (no cure for that one)? Or did some of the fabrics bleed onto others (if so, you might be able to wash it again with Synthrapol or color catchers and the excess color might come out)? Also, are you sure it looks bad, or are you being overly critical of your own work? In any case, I would still gift it, either to your friend or as "wrapping paper" for another gift, with an explanation that it didn't come out quite like you expected, but will still be useful. After all, any quilt would look used after the baby threw up on it a few times.