I made my first attempt @ marshmallow fondant. But it came out squishy and dry on the inside @ the same time.?

First here's the formula I used: 16 ounces white mini-marshmallows, 2 to 5 tablespoons water, 2 pounds icing sugar & 1/2 cup Crisco shortening. After melting the marshmallows the directions said to add 3/4 of the sugar and knead it in. After I got the sugar kneaded in I added the rest. That's where I went downhill. By the time I got most/all of the sugar in the smoothness was gone and it seems like it's too dry, but if water is added, no good. If sugar is added, no good. And if more crisco is added, no good. I can knead it so it's smooth on the outside but the inside is all dry. Can anyone give me an idea what I did wrong?