How to remove stinky mildew smell from towels: Wash on hot w/ no detergent, but 2 cups white vinegar instead. Wash again on hot w/ detergent + 1/2 cup baking soda. Dry COMPLETELY - use no fabric softener. This totally worked for us!!
Place a dishwasher-safe cup filled with plain white vinegar on the top rack of the dishwasher. Using the hottest water available, run the dishwasher through a cycle. The vinegar will help to wash away the loose, greasy grime, sanitizes, and helps remove the musty odor. Next, sprinkle a cupful of baking soda around the bottom of the tub and run it through a short cycle. The baking soda will help freshen and removing stains.
The only SPOT REMOVER you may ever need ~ Mix one part Dawn dish washing liquid with two parts hydrogen peroxide; pour or spray it directly on the stain, and watch it disappear like MAGIC. If this works, I will seriously kiss someone.