It can be very difficult to wet peat moss when it has dried, was it damp in the bag when you purchased it and has dried out since, or was it dry to start with?
Filling individual planting holes with a material that is different from the native soil can cause problems with water movement but it's difficult to know exactly what your situation is without seeing it. Perhaps that's not what you did? I don't know that I would necessarily do any more to fix it than you already have (mixed in some clay and got it thoroughly wetted).
Perhaps the calla lily died before it rotted? It can be difficult to know which way around things happen sometimes?
