Can you post a picture? That might help to see what's up with it.
You drew a diagonal line on the back of the 3.5 sq correct? Stitch a thread away from the line (just next to, NOT on the line). The square is lined up even with the edge of the rectangle before stitching. Draw the line before layering, if the fabric is moving to much, use a piece of very fine sandpaper under the square. I prefer to use a mechanical pencil.
Hope this helps.
I have the third block done, will post pictures later this morning, I have a phone interview to do first.
Ann