Attached Link: http://www.philc.net/CC_sampleVideo.htm

Yes,  I used it on the Daz skeleton and some other figures.

EDIT:  Here is an example of it on the skeleton. It's been reduced 40%

It is a dynamic cloth that you work with in the cloth room.  But that's really easy.  How the cloth falls depends on the pose of the figure.  Which gives the ghost sheet a very natural look because it falls with the body and drapes nicely.

I'll dig up a link to a tutorial and post  it for you if you don't know how to use the cloth room.

EDIT:  Here is a tutorial done in Flash that will help  you.  If you get stuck, just post back.  But you should manage ok with the video as it's quite thorough and gives a walk through visual.

"It is good to see ourselves as others see us. Try as we may, we are never
able to know ourselves fully as we are, especially the evil side of us.
This we can do only if we are not angry with our critics but will take in good
heart whatever they might have to say." - Ghandi