Answer: Moldy soil would indicate it has been kept too wet. In my experience, this can happen easily with the pellets.
Your goal is to keep the soil evenly damp or slightly moist, but never sopping wet. With seedlings, it may mean watering lightly twice a day at first, then when they are larger you can water a bit more at a time but only once a day. Never allow the pots to sit in standing water and make sure there is some slight air circulation in the area where you grow them to avoid a stagnant situation. For most seedlings, a cool room temperature of about 65 degrees is fine.
Parenthetically, sometimes a bit of green mold or algae or mossy looking growth occurs on the soil surface. This will not harm the plants but may be an indicator that the soil is too wet and/or that the temperature is too high or too low.
Here are some general seed starting instructions.
Plant seeds in barely damp soilless mix. Water lightly to settle the soil. Cover the pot with clear plastic wrap (to maintain humidity) and set in a bright location out of direct sun. (Direct sun would overheat the colsed container.)
Watch for germination and remove cover as soon as seeds sprout. Place seedlings under fluorescent lighting (one warm color bulb and one cool color bulb in a shop fixture is fine) with the bulbs just an inch or two above the foliage. Set the timer for 16 hours a day.
When the seedlings grow "true" leaves, transplant into individual pots and begin fertilizing with a water soluble fertilizer at a very dilute strength, applied only to the soil, not to the leaves.
In terms of when to plant, take care not to start too early. It is difficult to produce top quality transplants at home, so the less time they are under our imperfect indoor conditions the better. Most seed packets give a range of weeks such as 6 to 8, and you can use this as a guide. (Plants with no time indicated can usually be direct sown in the garden with good results -- for example, beans and sunflowers.)
Finally, remember to take time to gradually condition or harden off your plants before transplanting them into the "harsh sun and wind of real life" in the garden.
I hope this helps you troubleshoot.
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