Cailin, sounds like your Hotsling is probably a bit too big and, in my opinion, a size 2 would probably be a better fit. You could try shrinking your Hotsling - if it is a single layer and not reversible. With the pouch folded measure the top and bottom, then wash in hot and remeasure. If the pouch hasn't shrunk much then do about 5 - 10 minutes in the dryer and remeasure. You'll probably want to shrink the pouch about an 1" or maybe a tiny bit more. Also, if you have specific questions about the fabric and shrinkage email Customer Service at Hotslings for tips.
If baby's head was kinked funny and you need some help with positioning please go to www.thebabywearer.com and look at the "Correct Positioning" article. Here is the link: www.thebabywearer.com/articles/HowTo/Positioning.pdf
However, all this information is not intended to discourage you from trying a Peanut Shell. If there is a store near you that carries them by all means go and try some on and see which size fits and how the pouch feels. Peanut Shell a well-made, comfortable sling and even if you get your Hotsling to work for you having another pouch, like a Peanut Shell, would be terrific. (I'm a firm believer in multiple carriers so you would have one to wash and one to wear. Unfortunately your baby will at some point get the stomach flu and you will need more than one baby carrier - believe me you'll be glad to have multiples.)
M'Liss