Answer: Seedlings are very sensitive to all kinds of change, and it can take some practice in growing them to get good results on a consistent basis. It sounds like the seedlings may have been too moist at some point, causing the mold to grow. In some cases a little mold on the peat pots is nothing to worry about. In other cases it can be the start of damping off problems.
Here are some pointers on the seed starting aspects of the process: Start out with soil that is just barely moist, like a well wrung out sponge. Plant your seeds and cover them with the plastic wrap to maintain humidity, but open it as soon as they start to sprout and put them immediately into bright light. Make sure there is also some air circulation where you keep them as stagnant air can encourage fungal growth. Next, make sure the plants are thinned enough to allow for ample light and air to filter through them. Also, do not over fertilize them. They do not need fertilizer until they have several sets of true leaves. You might try watering by dribbling water gently and slowly out of a small pitcher onto the soil rather than spraying them -- wet foliage will also encourage fungal growth. At the same time, take care to keep them evenly moist, still like that damp sponge. Finally, make sure all of your tools and equipment are clean and that you are using a relatively sterile potting mix such as a soilless seed starter of peat, vermiculite and possibly perlite. Other causes of fungus can also be too high or low a temperature or too little light -- many gardeners find it necessary to use supplemental lights for seedlings.
Once your seedlings are growing well and the time to transplant them outdoors approaches, you will need ot begin to harden them off. This means conditioning them gradually to outdoor conditions such as wind, rain and the strength of the real sunlight. Start by setting them outdoors in a shady protected spot out of the wind and gradually increase their exposure to the sun and other elements. Protect them on cold nights, too. Some gardenrs will use a cold frame for this, others use a variety of methds they discover over time work for them.
I'm sorry you've had such a frustrating experience! Most of gardening is a matter of trial and error and learning from our mistakes. In the end, it turns out that some people really enjoy starting seeds and/or do it for some other reason such as wanting a specific variety of plant unavailable except by seed. Other people would simply prefer to purchase plants. It's really just a matter of personal preference.
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