Have them observe how the worm will right itself if overturned. Ask them what they think based on picking the worm up and gently feeling it. Go over how a skeleton helps us move by being an attachment site for our muscles. Ask them if they think a worm has muscles. Have them observe how a worm moves and come up with a scheme of how the muscles work based on their observations.
Worms have a hydrostatic skeleton, i.e. it is a bag of water.
Contraction of circular muscles will extend the worm Contraction of longitudinal muscles will make the body contract. The fact that you start out with the worm on a wet towel seems to indicate this preference but ask the participants to test for their worm's preference. Just observing the worm as it comes to the edge of the wet paper towel should lead to some conclusion. Or a dry paper towel can be folded in half and placed on top of one half of the wet towel to see what happens. A worm is essentially a tube within a tube.