Nancy won't start the process until you're completely prepared. You need to have a spare clean napkin in your inventory, and you need to be standing as close as possible to the door.

Also, you need to have first listened to Jess's phone journal all the way through, all five entries, and then talked to Wade (in the cemetery) and had him tell you about the poem people use to call Charlotte.

Once you have the napkin, have heard about the poem from the journal, and have talked to Wade about the poem, you're read. Go back to the tool room door and try again, and this time it should all work.