I've got a small and it seems fine - I'm 5'5 - had it since DD was about 6 weeks and her head quite strong by then. Sounds like you may have the wrong size but IMO newborns are so floppy that the soft slings can be a bit scary anyway. I was constantly terrified she'd suffocate in our kari me when she was tiny, even tho she loved it. And in her carseat for that matter!
My coorie prob goes to about naval too and i do have to support her with one arm when in it - but i mostly use the sitting position. haven't mastered the handsfree with it - anyone else?
Why don't you email brightspark - i'm sure they'd help you out.
hmm I like my pouches to rest just above my belly button..... so I would find yours large I think.
The fleece is v stretchy so you may want to downsize. Email Laura at Brightsparks for help!
FWIW there are articles about positionning the baby well and safely over the the babywearer website. I often place a rolled muslin or a folded one under ds (5 weeks) in a pouch. I wonder if you can fold the fabric back so she is less enveloped? Her being hidden right in sling is no big problem as long as her face isn't stuffed against the fabric imo/ ime.
Key points- as long as baby is not chin to chest that is fine (the muslin helps this), so long as baby doesn't get too hot that is fine.
Noviceknitter- I put the muslin folded behind Ds's shoulders. This lifts his chest and straightens his back just enough to stop chin to chest (which is an asphixia risk). You could use a small fleece blacket too.
If your baby is flopping forward I would try positioning them slightly differently in the sling. I guess they are sat uprightish and I wonder if you can get them more laid down/cradle like?
A sitting position in a sling is fab for a baby who wants to start to look out a bit but in a really loose pouch you might not find the support to hold them in the position. Maybe try flipping the shoulder to tighten it and pin them to your body a bit more... or try a cotton pouch or tighter fleece.