When the figure isn't posed, it looks perfect. Sits on the model well, isn't distorted, no poke through of any kind. In the picture above I'm raising G8's arm with "Arms up-down" dial in Pose controls, on the Parameter's tab, the effect is same with Bend dials for selecting arm, and when I lift it by grabbing it in the viewport. By "underlying mesh" I suppose you're referring to G8F's mesh? it's fine, there's nothing wrong with it.