Where did I go wrong?

Results take time. Sometimes lots of time. If you keep at it, you will eventually see results. Even if they are small or slow, they are still results. Contrast that to NOT lifting weights, where you are guaranteed not to get results.

Another factor is doing what you enjoy. If you don't enjoy doing something, don't do it, find some other equally physical hobby to replace it with. The less exercise feels like work, the more you enjoy your exercise, the more likely you are to stick with it long term. It's the long term that gives you results.

Not enough info. How tall are you? How old? How long did you lift weights? How often? What training program?

Building meaningful amounts of muscle takes months to years, especially for us women. Even then, it won't show until body fat gets low enough for it to show. Some women don't like to be thin enough to look really cut. It sounds like you're going for a more cut look, but whether you could be there at 135 is somewhat dependent on height, among other factors.

Specific kinds of strength training are better for building muscle mass, and they do (as others said) work better when eating relatively more calories, at least near/at/slightly over weight maintenance calories. If your past attempt was alongside weight loss, particularly faster weight loss, then muscle gain is even less like to happen quickly.

Program matters, too. Some women I know find high-rep low weight routines, maybe circuit training, more fun. Those will build some muscle, but it's a slow route vs. some other potential programs.

If you want that kind of progress, pick a good program. There are some here, and you'll find some discussion of which are best for adding mass:

http://community.myfitnesspal.com/en/discussion/10332083/which-lifting-program-is-the-best-for-you/p1

Follow the program (or a beginner one first, then a successor one) consistently for at least the better chunk of a year. Eat at or near (a little above/below) maintenance calories. Get good overall nutrition, especially but not exclusively adequate protein. That's your best odds of achieving some progress. If you're overweight, muscle you have may not show. (I can't tell where you are from what you say, you mention having been 135 but don't say how tall you are, and don't say you're 135 now.)

I was very active while I was obese, and I didn't much increase my activity level while losing weight. I looked pretty doughy, when obese, as you'd expect. Once I'd lost most of the way to goal (120s pounds at 5'5"), it turned out there were some modest but visible li'l ol' lady muscles under the fat layer . . . they'd just been hidden by the fat before. It's hard to remember when it started to show up, but certainly not much before I got into the normal BMI range (below 140).

To the advice about taking awhile to add muscle, and the look that you have muscle - and that wasn't going to happen prior when dieting (your lifting just allowed you to keep what you had, which sounds like it might not have been much to start with).

Sadly the ability to end up skinny fat - good weight but flabby everything because high % body fat - is kinda easy to get.

That's where you would have been most likely last time if you hadn't been doing resistance training.

Are you actually attempting to lose weight again - you don't state that, just the exercise?

But it sounds like the exercise was only done to reach a goal body weight last time.

You say incorporating it now into your routine - routine to lose weight?