I saw someone else state that they have towels in the bottom of the ferret cage. I decided to try and give this a shot, and I've noticed a lot more sneezing and coughing... Is it the towel fibers? The detergent?

Do you wash the towels with the same detergent as their other bedding? You might try omitting fabric softener on the stuff you put in there. Could also be something on the towels, if they've been in a closet or something. But yeah, the towels could have a lot of lint I guess.

As a side note, a lot of people advise against putting (terrycloth) towels in ferret cages because their nails can get snagged. I have put towels in before and haven't had that problem, but I check their nails frequently for "barbs" and remove them anyway. I don't keep towels in there regularly though (only if I need I'm having a bad shortage of bedding). I usually use T-shirts, pillow cases and sheets, and other old clothes. Recently I put an athletic wear shirt in near their water bottle ("leakproof") which I liked because it didn't retain the water. Recommend if you have an old one.