Lano-Rinse is excellent for maintaing softness in wool garments. I only have a tiny bit left and am looking to replace before wearing my hand knit wool sweaters . Intially I also had lano-wash . you will not be disappointed
i haven't come across it, but I would check what else it contains. Solid lanolin is best for lanolising wool nappy covers, as it's not just softness you want, but the anti-bacterial and waterproofing properties. Liquid lanolin has most of the waterproofing qualities removed as it is lanolin with all the solid fats removed. So it will soften but not waterproof. So check whether the lanolin oil in it is just that, or if it really is complete lanolin, with the solid fats still in it - it sounds as if it may be the liquid lanolin.
You can get soluble lanolin for wool nappy covers, which is solid lanolin ready prepared for lanolising wool nappy covers though. Thats by far the easiest way to lanolin.