Weird. It seems like this is a visual artifact of some sort in the VWD preview window, and the simulation is actually working under that weird exploded mesh. At least that's what I found after removing the Smoothing Modifier from the base G3 character (DAZ Studio). I saw in the manual that the Smoothing Modifier can cause havoc, and finally realized that not only the cloth can't have it but also the collision object needs it removed.

I let it run for 150 frames, and although much of the preview was blocked by the exploded mesh I could see a simulation going on underneath. And it successfully sent the animation to the host at the end.

Weird. And I guess support for this wonderful product isn't what it used to be? I really hope the authors of this wonderful software have great success with it, it's an amazing piece of software.