Even with just a little bit of experience, you can whip this thing together in 25 minutes or less! These towels also make great baby shower gifts in a hurry.
Bath Towel (I'm using a beach towel this time!)
Step One: Fold your hand towel in half with the two "decorative" edges together and cut on the fold. Then fold the half in half, finding the center of the raw edge, and mark with a pin. Also fold your bath towel in half to find the center of the long edge, and mark with a pin. Line the two edges together -- "right" sides together (the sides you want facing OUT), matching the pins.
Step Two: Pin the edges together, leaving the edge of the bath towel sticking out slightly under the hand towel (see next photo).
Step Three: Sew approximately 1/4" from the edge of the hand towel. I actually go back here and sew just barely to the right of my first line to ensure I've caught the edge the whole way across.
Step Four: Turn over and push the finished edge of the bath towel over to the hand towel side, covering the raw edge of the hand towel. Sew along the finished edge of the bath towel to encase your raw edge. This finishes the seam beautifully!
Step Five: Lay the towel down with your new finished edge up ("right" side down), and fold the hand towel down so the edges of each towel are just touching.
Step Six: Sew down the inside edge of the finished edge of the towel on both sides of the hood. There is a lot of bulk at the end (where my thumb is in the picture), so go very slowly over this part.
You will have a pocket like this.
Step Seven: Turn the towel over so you are looking at the back and fold the two corners down to the edge of the hand towel. Sew along the outside edge of the finished edge, lining it up right where the bath towel meets the hand towel, on both sides.
Here is what the "front" will look like.
Now your little one is ready to be all wrapped up and cozy after a bath or a swim!
**For another idea, see the towel I made for JellyBean a couple months ago. You can use any fabric you like for the trim -- just cut off the existing trim and bind the edge like you would a quilt!
edit 6/10/10: See another version HERE!