Never use liquid fabric softener in your clothes washer! By doing so, you will cause yourself more service calls (repair costs!), and ultimately lessen the life expectancy of your washer.
This page contains the following solutions.
In response to the folks out there with musty towels. We've tried a lot of approaches and only one actually worked. The first thing we did was get rid of the liquid fabric softener. We then cleaned the washing machine by brush, using bleach and water.
One alternative to buying fabric softener sheets is using diluted liquid softener sprayed on a cloth or piece of interfacing that is added to the clothing in your dryer. This is a page about using liquid fabric softener instead of dryer sheets.