OP, two points I’d like to stress to you. Get another job that is considered a step up from instructing. It’s imperative that you prove yourself to other employers like the regionals you’re try for by successfully passing a Part 135 etc. training curriculum. That step will more than balance out your previous failure.
Freight, right seat 135 passenger ops (Boutique Air for example), just anything that’s considered a career progression step from flight instructing. In the meantime keep hitting up the regionals hard. I think one or more of them will give you a chance to interview.
That brings me to my second point. Absolutely get an interview prep before going on any interviews. They’re not that expensive is my understanding and it’s imperative that you be groomed on how to properly explain your training failure, how you’ve handled it and what you’ve learned from it. In my opinion, an interview prep will do you good and you pay for it once and have the information and the grooming that you need for multiple interviews.
Good luck. It’s a minor speed bump. Keep pressing and you’ll achieve your goals.