Rainbow Cake for Samantha

I have wanted to make this cake ever since I saw it on the Martha Stewart Show. I filed it away for a special occasion. My daughter, Samantha saw this same cake on a cake blog and indicated that she wanted one. Ah, the perfect occasion presented itself in the form of Samantha's 21st birthday.
The original recipe called for swiss meringue butter cream. Since I have never made that(I vow to try it soon), I decided to make seven minute frosting. I also used slightly different colors in the cake. In addition, I wanted to try using fondant circle cutouts to decorate the cake with. Surely you have seen many cakes done in this fashion. The first one I saw like this was on Ace of Cakes, but that cake was completely covered in fondant.
So, I made the cake, filled the layers with a good amount of frosting and covered thoroughly with frosting. It looked beautiful in it's shiny white simplicity! I added the fondant circles and the "Happy Birthday Samantha", also made of fondant. After covering the cake, I went to bed. The next morning I noticed the circles were losing their shape a little, the fondant was going soft! was it the humidity? Had I not let them dry long enough? what was happening? I am so glad i didn't make this for a customer. There was another surprise when we cut the cake. I expected that the white frosting would stand out against the different colored layers, making them really pop. Where was the frosting??? It disappeared!! It still looked pretty but I was disappointed. It tasted great, nice and moist, so I think the cake absorbed the frosting. Now that I think of it, I did make another cake with seven minute frosting and when cut, it too had vanished. Any ideas as to why this happens?