The "volume" is probably due to the collision offset and collision depth settings. I haven't tried to use to cloth room to make hair, but I have observed something like this with dynamic clothing.

With regard to the hair room, That depends on what you call "dull looking" hair. I have had some success with the styling controls although they have their limitations.It takes a lot of patience and not all styles are achievable. Perhaps you can share some photo to show what you are trying to do?

Poser 11 Pro, Windows 10

Auxiliary Apps: Blender 2.79, Vue Complete 2016, Genetica 4 Pro, Gliftex 11 Pro, CorelDraw Suite X6, Comic Life 2, Project Dogwaffle Howler 8, Stitch Witch