You can either use it as litter in the litter tray OR on the floor of the hutch. One of the other, not both, or they'll use the whole hutch as a litter tray.
Just put about an inch of megazorb on the bottom of the tray and put some hay at the front of it to encourage them to use the tray as bunnies tend to like to chomp as they go!! There isn't any need to put anything on the rest of the hutch floor at the moment apart from toys, in fact that may well discourage your rabbit from using anywhere else as a litter tray. Place the litter tray in a corner and put the food bowl in one of the other corners so that corner doesn't get used as a toilet either.
You can put a peice of vet bed down if you want. Here's what my hutch looked like, but I've since cut the vetbed area down:
I thought cat litter was bad for rabbits?