Welcome to cake central. It sounds like too much powdered sugar.
When you add the sugar, you need to hold back about 1/4 to 1/3 of the total. Depending on the humidity, it may not need it all.
you can sift it over the mass, and knead it until it it just no longer sticky.
When my fondant is dry like that I heat it a little in the microwave and keep kneading in Crisco until it isn't dry anymore...so you might try more Crisco if you want to save this batch. HTH!
Another mmf thread with the same problems:
http://forum.cakecentral.com/cake-decorating-ftopict-433653-.html
HTH
I always use shortening in my MMF - my recipe calls for 1/2 cup shortening to be stirred into the melted 16 oz of marshmallows. That really seems to help the elasticity of the MMF. Try kneading in some shortening as others have suggested. MMF also is better if you let it sit undisturbed (tightly sealed in a zip-lock bag) for 24 hours before using - this allows the sugar to hydrate evenly.
Quote by @%username% on %date%
%body%