Oh, and what of the resolution? I can see by the size of the spikes there at the shoulder the res is fairly low. And they're right about the armpit. Dynamic cloth doesn't like to be pinched.

One more thing...and don't feel bad because EVERYONE does this....but 30 frames isn't enough for a good drape. You need more. More frames for the fabric to decide where it wants to go. I normally run 100 and put the pose at 75. It has 75 frames to decide where to go.

Your fold resistance also looks like it might be high. Turn it to 1.0 or 1.5 and see what happens. Parts that are folding need to, well, fold. LOL.

Laurie

Edit: I reread your post and it looks like you have more than enough mesh. If you leave the defaults that's no good. The default cloth density is really pretty stiff. Try doubling it. Also, you don't really need cloth self collision unless you have a layer of cloth touching another layer. Turn that off. I never, EVER leave the cloth settings at the default unless I wanna drape a piece of burlap :P.