I made a new mesh for quilt/rugs wall hangings. It works fine, there seems to be no problem with the package inside the game at all. However, in Scenegrapher, I get an orphaned shape and when I look at the cres file, there is an unreferenced shape noted. I tried just deleting the shape line in the cres (after backing up my package) and that caused my game to crash, so obviously it is needed for something. The only weirdness is that I cannot view a preview in the Mat Override area. I can, once I delete the shape reference in the cres, but again that causes the game to crash.

I don't want to submit this package if it is going to cause problems, but I have no idea what that hanging/unreferenced shape thing is all about.

Can anyone shed any light on this?

You have just one SHPE in your package, but 2 referenced in CRES.
Check this article about CRES structure - besides other valuable information, it points where shapes are referred in CRES. There are 2 such places, and you have to fix both.
First, on Reference tab - note that remaining SHPE in the package in the 2nd (will have index 0x01 in corresponding Practical) in the list.
Second, you have to remove Practical node which points to the 1st shape (with index 0x00) from the CRES tree - via Edit Blocks tab. Since it's node with index 0x3 - not the last one - you'll have other node indices shifted, so you'll have to fix the tree. After Practical node 0x3 is removed, you'll have to re-parent its children to its parent - so root node will have 2 children, 0x2 and 0x3 - and fix child reference in former node 0x5, now 0x4 - its child node index is now 0x5 (was 0x6).
Ah, and you have to fix the reference to shape in remaining Practical - from 0x01 to 0x00.

Good luck

How the heck did this happen and how bad would it be if I just left it as it is?

One of two - either you manually deleted the other SHPE-GMND-GMDC resources, or somehow SimPE didn't pulled them when cloning.
Game crash, probably? Not sure.
The fix may sound complex, but it's not - it took less then 5 minutes to do, I attached the file with changes. The strange thing that I didn't see any version of it, old or new, in the game, could it be related to addons? Does my version works for you?

Thank you!

You are right. I deleted the shadow GMDC for the cloned file (4th element wall hanging) along with the shape, MatDef and txtr. I did that because the shadow didn't fit with the new mesh and since it is a wall hanging, the shadow is so slight as to be kind of stupid. It never occurred to me that this would cause problems.

I will test it as soon as I get home from work. I appreciate your help.

Hey! Just tested and it works great. I looked at what you did and you are right, it didn't look as complicated a fix as I thought. Who knows why the shadows are sometimes a subset of the GMDC and sometimes it gets it's own? I will never do that delete thing again!

Thanks, you are a filesaver!

Good
Why not? Shadows are often useless, and if you delete those resources, you'll reduce file size a little bit :D