Don't give up. Sometimes we fail at what we do. Get over it and don't let it stop you. Besides, it is better to fail an exam with zero consequences than to fail in a real project with large consequences.
Do not scrap your design, just spend some time refining it. It seems that most of your problems stem from an inadequate class design, therefore
you should focus most of your energy on the class diagram. Most likely the class structure is just a bit sloppy and could use some TLC.
Make sure you are adequately managing dependencies between Application Layers with the use of
J2EE Patterns such as
Front Controller,
Sevice Locator,
Business Delegate, and
Session Facade.
Pay close attention to your
Domain Model and their relationships. Any deviation from the supplied model should be justified in your design notes.
Finally, you should have a design notes/assumptions document that should help the grader understand your design, though proper naming conventions do wonders here. Many people have reported success with lengthy design notes. Personally, I had less than a page. My goal was to make a design that was easy to understand and basically self-documented, seemed to work for me.
For more tips check out these other posts:
class diagram how? Fail Part II -- 60% I lost part II and III by scoring only 68% Most important of all: Take a break!
Don't look at your project for a week are two and just relax. Then you when you go back to work on it, you will be renewed and hopefully able to see the design in a new light.
Good luck and by sure to post back when you pass your second attempt.