The root-ball should really be full, with healthy white roots through-out the entire substrate. You should see roots starting to grow out the bottom of the container, which is a good indication you should transplant. It is possible it just wasn't ready to be transplanted, or that you're watering improperly (roots not growing properly).
You shouldn't try to transplant shortly after watering or if the medium is already wet. Wait until it is just moist, but mostly light. Otherwise the weight of the medium risks ripping little roots and falling apart, unless the plant is getting root bound. The best time to transplant is just before they are becoming 'root bound'.