Marshmallow fondant is so much fun to work with.
I'm not sure which recipe you are working with, but I highly recommend this one:
http://whatscookingamerica.net/PegW/Fondant.htm
Lots and lots of crisco, lots and lots of kneading, lots and lots of powdered sugar. Just keep adding the sugar and crisco and work it...it *will* get nice and smooth and flexible.
Gel colors work the best for tint-ing as they don't add so much moisture and get richer colors (especially important for red).