Umm.  Let's see.  

First, you'll probably want to try transfer morph first and only use transfer shape if you end up with a morph which suffers from the condition I've been calling "lumpiness".  This tends to affect only homemade morphs in which the quality may be iffy (like my own custom morph).  Generally, transferring the morph rather than the shape should be preferable.

If you're going to transfer the shape, you want to set the source morph that you want to copy before running the shape transfer.  Otherwise you'll end up copying the unmorphed shape.

To smooth, you need to select both a source and target actor (for reasons pertaining to screening box handling), but only the source listbox selection will be smoothed.  Smoothing also works on a morph target, so you'll have to select a morph to get it to run.  I know it's confusing that the destination actor for the smoothing is selected as source in this function, but the source actor is the one which displays its morphs for selection.

It looks like you may have ended up with some incorrect correlations in your datafile.  With heads, it generally seems to be best to screen out certain materials for a run.  You'd want to compare headskin to headskin, for instance, and leave the inner mouth and nostrils and lacrimal and eyelash geometries out of it, to be sure the skin doesn't decide it's found a best match inside the mouth, or elsewhere.  It kind of looks here like you've ended up with eyelashes correlated to the forehead and nostrils to the lips, and what-all.  I would suggest trying a run with just the skin surfaces for both actors being compared.

One point about the materials screening.  I've just discovered in my own efforts that when screening mats, you need to include a material which is adjacent to the correct material, or you can get dropped verts on material joins.  That is, when screening to compare only the lips to lips, you'd want to select only lips for the target, but lips and innermouth and face skin for the source.  Otherwise you'll get what I have pictured above, where there are verts missed anywhere one material joins with another, once the datafiles are merged together.

Ah.  I hope that isn't too confusing.  See what I mean when I say I'm not the best communicator in the world?

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Cage can be an opinionated jerk who posts without thinking.  He apologizes for this.  He's honestly not trying to be a turkeyhead.

Cage had some freebies, compatible with Poser 11 and below.  His Python scripts were saved at archive.org, along with the rest of the Morphography site, where they were hosted.