Are you using multi fold paper towels with this dispenser? I want to be sure I but the correct one!

Yes, that's what I use. Be sure to weigh down the top so it won't come off when you pull a paper towel.

Has anyone used this in a kitchen drawer? The dimensions make it seem like it will fit in the drawer next to my kitchen sink. Has anyone tried this?

The inside height of a kitchen drawer is 3.5” which is exactly the height of the plastic paper towel case. Theoretically it should fit. However when refilling paper towels in the case, fill the towels all the way to the top to minimize refilling frequency. With the lid, a fully filled case will exceed 3.5”. Suggestion for everyone, use two large rubber bands to tie the lid and the case so that every time you pull a piece of towel out, you won’t yank the lid off.

Does the lid come off when you pull out a paper towel?

yes.. every single time.. The lid opening is too small for the paper towel.. The outer case is too big but the opening on the top is too small. The top part is has too much friction with the towel.

What type of of paper towels fit this holder?

The internal measurement of this box is 9 1/4" L x 4 5/8" W x 3 1/4 H. Good luck to find an interlocked paper towels to fit this box. I haven't been able to find one so far since I brought it. Btw, it took exactly a month to receive this product from Japan.