Not sure why the mmf has turned out mushy as it should be the texture of shop bought fondant when made properly. My suggestion is to remelt it if you can ( or experiment with a small amount) and mix a tablespoon of sugar at a time into it until it forms a ball. If remelting doesn't seem to help, I suggest try a new batch of mmf and weigh and measure ingredients to the letter. Regarding the taste, I don't think you can do much about the sweetness, as it is all sugar. Adding any liquid like lemon juice to cut the sweetness, may alter the texture of the mmf. You may not like the sweetness but I'm sure the recipients of your cookies will love them!! Best of luck!