I soaked the towel and wrung it out then draped it over the door of the crate before closing it, so it can't fall off. Then put his normal blankets over the top and aimed the fan at the front of the crate, from enough of a distance that he can move away from the breeze if it annoys him. I think putting the other blankets over was the key. A bit like the way the cool coats work, by heat exchange. I'm guessing the damp towel is drawing heat as it evaporates. With the blanket over it, the only place it can draw heat is from inside the crate.
During the day he happily sleeps with his cool coat on, even in his crate, but I like to give him a break from it at night to let his skin dry out.