"My guess would be that this is because the simulator is folding polygons diagonally, resulting in highly non-planar polys; looking at the preview image, one can see several polys that have opposing vertices on the fold, rather than adjacent ones. I had the same problem with a very simple bedsheet simulation I tried to do."

That was my guess, too (but ptrope got in 1st). I get the same problem on some clothing, and usually fix it by exporting a .obj of the draped cloth and then using Hexagon to sort it out, either by smoothing it (usually) or by converting to triangles (which can sometimes work better). Smoothing sometimes shrinks the cloth in areas where it shouldn't get shrunk..

I have, but don't use or know Wings, but IIRC it has both these facilities. Try asking in the Wings forum here - they LOVE to help:-)

If you want to send the sheet to me I can try sorting it for you. IM me and we can arrange what to do. I usually visit at least once a day.

Cheers,
Diolma