i Also misread it and thought it very odd, now I understand better!
You can put a towel or blanket inside the cage, but some rabbits will chew at anything and eating fabric could make them ill. It’s no good for litterbox-training, though, but some rabbits like to snuggle with a soft towel.
Unneutered rabbits can stink, it’s hormonal. Unneutered male rabbits are also hard to litter-train properly. But seeing that you’ve had Sam for such a short while, you really shouldn’t give up yet, I think, at least. About your daughter, maybe this could be a good way to teach her how to be gentle with small animals? You shouldn’t let her handle Sam on her own until he’s settled in, though, and she’s learned how to behave around him. It would be the same with a puppy, really. Young children can’t of course know ubefore they’ve been taught =)
I guess you’ve read the tips on litter-box training here on BB, otherwise please do. And keep asking questions here because there’s so many experienced rabbit-owners here who can -and will!!!- offer lots of help and advice.