Multiple things:

1. I don't understand the punchline. Is it that he is blowing his nose in your used whatever? First you mention how you grabbed a towel... so was he blowing his nose into a towel? If it was a tissue, why would he used what looked like a used tissue? I don't get it.

2. If you are going to make such a long-winded story, the punchline better be something REALLY QUICK TO UNDERSTAND and FUNNY. This doesn't hit hard enough if at all and it probably is only funny to you.

3. This joke is more gross than anything, and kills at least half your audience. Yes, I know comedians are gross and crude often, but this is just something vulgar and immature. Any females in the audience will not relate to this or will be turned off by it as it's just "normal boy bathroom humor."

All in all, this does not even seem worth fixing up; leave it out of your routine.

Thank you for the honest critique.