What do you line knit fabric with?
Use a ballpoint/jersey needle (size 75/11) for sewing knit linings. All polyester thread is the best choice for sewing these fabrics. Seams, Seam Finishes, and Hems: Use a stretch stitch or a small zigzag (2.0 length, 1.5 width) for seams in knit linings.
How do you edge a knitted blanket with fabric?
Hand sew the fabric to the back of the blanket using a ladder stitch. Repeat for all the four sides, leaving the pointy corners loose. Remembering to pin out your knitted edge to stabilise it. Once you have all four edges on the corners will still be loose and moving around.