Some times a newly imported OBJs doesn't behave properly in the cloth room. Save it as a prop then load it in a new scene. Use the HighRez Prop square. The standard square does not have enough polygons to behave. Use lots of frames. Let the animation run out for 30 or more. When your cloth is in the form you want export it as an OBJ. Then you and import it and use it like a fixed prop. Nerd