|silk fabric weaving circa 1914|
What about the statement on the fabric? The statement -- for personal use only -- is wishful thinking on the manufacturer's part. Unless you affirmatively agreed (signed something, clicked "I Agree" or made some other indication of assent) at the time you purchased the fabric, such a statement would not be binding on you.
What you can't do ... If the fabric is an infringement, that is, an imitation made without permission of the manufacturer, you'll run into problems. In that case, the copyright owner can stop your uses whether you knew or should have known it was infringing. You may also run into problems if you create fabric from found imagery that is still protected under copyright. In that case you're infringing the image owner's right to create derivatives.