So here we go. I must have spent ages on this part, redoing this over and over again, but I began to understand Illustrator more as a result. The first was creating an outline of the quilt, I made each "patch" unique and used the shapes and lines tool to create each design.
I opened the blank design in Photoshop and began filling in the quilt. I added lots of colors, patterns(default Photoshop patterns), more shapes, letters, numbers, and more. I applied a texture to the entire quilt, to give it the look of fabric. I wanted a "homemade", almost homely quilt look, to go with the mood of my nursery.
I finished the quilt by adding in a fabric/denim looking border(its actually the bubble texture scaled down significantly), and finished my quilt. Time to apply it to the final scene.
I applied the texture, and fixed the lighting a bit as well, for better viewing and to emphasize a night scene.