yup, the yellow-bag peat is what I use. It can be a nightmare to sink. Takes ages to absorb water and there is often a lot of fine stuff that gets suspended.
Here is what I recommend:
1: microwave it first - put in a large glass microvaveable bowl (glass won't absorb colours/smells), add water and mix to get it wet and 'muddy' and microwave for 10 minutes. (this will be messy)
2: put in tank, fill tank, leave to settle for a while.
3: scoop off the floaties.
4: using a siphon, suck out as much of the water as you can. Refill. Stir up the peat and let settle again, resuspending the fines. Repeat until the water is fairly clear of fines (will be a lovely tea colour)
It takes a while to sort the peat, maybe a week for a medium tank, your little one night be faster.
Add leaf litter over top - stops things stirring up the peat and gives a better substrate for different critters.
Oh, and search the archive, I have talked randomly about the joys of peat substrate