How do you use it?:
Very carefully 
Duh!?!?
Well, I'm not sure what you are using to apply it, but there are many tools out there that help modellers in using putty. Most are very small versions of what masoners use to put mortar on (lathes?); er, at least thats what I use. You don't need very much, in fact on a little is needed. Apply it smoothly across the surface you want to cover and try and feather it out like you would excess paint (makes sanding a little easier I find).
At first, I hated putty, because I didn't realize little is more and, especially if your not good at it, it takes more than one time. I'm only now coming to grips that maybe I should be covering a gap, sanding, and reapplying where necessary. Hopes that gets you started, maybe the more experienced modellers out there will help me...er...you with the advanced details

.