[SOLVED] What is causing this CC Issue ?

Hi. These type of distortions are caused by the fact that meshgroups of the blend that was imported in the package did not have vertex groups of the original. For example, if you were to transfer weights from the dress that has skirt vertex groups and then import that blend into a package started from a lingerie set that does not have them, you would get distortion in the area affected by skirt bones.

Open the package file, export all LODs, switch to the warehouse tab, make the window wider, check the name of the maxis item that was cloned to start the package.
Go back to main menu, click on Create 3d mesh, type something from that item's name (for example, paneldress) to find it, clone, export ALL of its LODs.

Open the maxis item's LOD0, next to it open this cc item's LOD0. You will need to compare each LOD of the original with the coresponding version of the cc item's. What you should look for:
1). Number of meshgroups. In most cases lod1,2,3 have less meshgroups than LOD0. If the autor imported the same blend file in all LODs, there could be a problem;
2). Extra vertex groups. Select the maxis item's meshgroup with 0000 cut number. Select the corresponding one of the cc's item.
If the cc item's meshgroup has more vertex groups, you need to delete them. You can do it manually by selecting each and deleting it with - button to the right or automatically*. The maxis item's meshgroup may also have some random vertex group that does not belong in this area and no vertex has its value, but it's best to add that vertex group to the cc item's meshgroup as well by clicking on the + button and double clicking on the created vertex group to rename it.
Anyway, once you get to the last meshgroup ( highest cut number), click on the small + button (in the Vertex groups window, bottom left corner) and type in Skirt, foot, toe. Check which of these vertex groups the maxis item's meshgroup has and make sure cc item's has them too.

It can be confusing, but just so you understand: if a maxis hat has only one vertex group in the list (head), then the hat you will replace it with should have only that vertex group as well. If the maxis hat has some random vertex group, you should add it in to your hat as well, without assigning anything to it.
If you separate, say, glass from glasses to make second meshgroup, the glass will have all vertex groups the whole glasses had originally, while the maxis glass will not. You need to delete these extra vertex groups.

*Download this addon. Put downloaded file in Blender\2.78\scripts\addons. Install it ( File - Preference - type remove in the search bar - enable the addon - Save user Settings - restart Blender);

No, you don't need to, just put 0 there

recloning will not help, different meshes have different vertex groups and number of meshgroups in different LODs. For something to match with yours you need to know the exact item they transferred weights from which most certainly is not the one they started a package from