They are both right. There are hundreds, if not more, of different ways to prepare henna paste. You just have to experiment with the powdered henna you can find and see which works the best/ gives the darkest color. I personally (I do this professionally in Nashville, Tennessee) mix henna powder with lemon juice, espresso, and tamarind, then add a little eucalyptus oil, then let in sit in a cool dark cupboard overnight. But everyone has their own recipe!!
Henna is a fickle thing. The same batch can come out extreemly dark or barely take at all depending on the persons skin and body chemistry. It is always good to keep a design on over night if you want to make sure that the henna really takes. You may already know this, but if you leave the henna on for a long time you should re-moisten it periodically with a lemon-sugar solution (high on the sugar end so it is like a syrup). You should lightly dabb the solution on with a cotten ball. If you sleep with the henna, carefully wrap it up (toilet paper works) seperating the fingers if need be. Stick a sock over all of that to keep everything in place (adds extra warmth too which is important for henna to set).
As for the peeling bit you experienced, I have never had that happen to me. If you are using a pre-made kit such results do not surprize me. You have to be very careful with ready made kits. They often contain ingredients that, although they come out dark, are not good for your skin. It is common to see kits use certain oils (like eucaliptus or walnut extract) which seem safe, but people may have alergic reactions to. Many kits also are not below using such harmful ingrediants as terpintine or dyes.
I suggest that you stop using the mix that has been causing you problems. Although it takes much more effort, creating a really good brew (uses coffee, tea, cloves, black cardmingon (sp?), etc.) and mixing it good henna powder should give you reliable and safe results. The batches that I have made have taken so well to people (even those who barely ever were able to get a light orange on their skin before) that a few minutes of contact with the henna left a good stain.
I hope I was of help and didn't just repeat a bunch of stuf you already knew.