Ditch the paper towels. Have you tried going right into a root riot or other starting mix, then into your heated propagator? Paper towels only waste time and add an extra dangerous step at the most vunerable point in the plants life. Even if you've used the method for years, I've seen the exact same thing happen to many people using paper towels-some strains can handle the stress of germing in a paper towel but some do exactly what yours are doing-thow a tap root and die. My theory is it thows a tap root and realizes it's not 'in the ground' and there isn't ANY light and it get's stressed and dies.