The naked co-ed sauna is the norm in Germany. I've been going there for business for 25 years, and can envision the scene you described with the towels for feet and buttocks from my time there. The first time, I went with a supplier (yes, it was a little strange at first) and thought I was being punked. I wasn't, it's just the way they do it. The only uncomfortable thing was that people kept looking back at the supplier and me as we were talking. Later, he said that most of the people in the sauna were surprised that an American would be in the sauna as we have a reputation for being uptight and uncomfortable in our own skins (literally). Damn Puritans!

Try not to stress about it, next time just do your thing and enjoy the facilities au natural.