Okay sorry to post yet again, but OMG I just tweaked the settings even more just to see what would happen and the folds are almost GONE! :D Just a little more tweaking and I believe that I will be able to use all the morphs with no problems (except pregnancy, but hey fabric really does go haywhire when your prego, lol). Pic is what it looks like now with settings:

Max Samples 60
Sym Samples 0
Distance Weight 0
Falloff Start 0.05
Falloff End 0.3

I know the settings are crazy, but desperate times call for desperate measures, right? lol