What did I do wrong? Cold, dry weather and a wet underquilt...

[BrRabbit]

An easily overlooked question: did you have your sleeping bag over your head? Were you breathing into it?

Thinking along the same lines here - are you a side sleeper? I am, and even though my breath was going outside the bag, it went into the hammock wall. Now, I don't have no underquilt, so it made no damage, but if there were one, my breath could be trapped by it and eventually maybe soaked it?

Were your clothes completely dry when you went to bed? That's another question...

Although... honestly I cannot believe anything short of hot water bottle leak or fever with sweat (which you said you did not have), could completely soak your sleeping system in this temperature.

I think you need to try it again

[Rolloff]

I'm with the vent the lee side of the tarp and raise it as well. I only batten down the hatch and hang a tarp low in storm conditions. Let the insulation package drive the bus, if it can. Add UQP, more clothes, or a pad in the footbox, if it can't, before pitching low.

[metalhanger]

Camp farther away from water and damp ground. Condensation happens when the high dew point air in the bag reaches the dew point temperature in the thickness of the bag. I have woken up with ice on the outside of my bag. Got up and shook off the ice and the bag was still relatively dry. 20F bag at about 23F conditions. Frost on the tarp is no biggee but a wet UQ? bad news.. Tighten things up and no gaps between the UQ and the hammock.