Do not use machine washable wool yarn for an item you want to felt, even if it is 100% wool. It simply will not felt because of its treatment.
Try felting an item by hand. It is really fun and gives you greater control over the finished result. Hot water, soap and lots of rubbing is all you need!
If you are felting a bag or a hat and you need the inner part of it not to felt together, place a carrier bag inside the item (tack a few stitches with cotton thread to keep it there if necessary) and proceed as normal. Remember that fibres can only felt together when they come into contact with each other.

