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SKINNING A CHARACTER USING FFD SPACE WARPS AND PHYSIQUE
Written by Adam Felt
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Using an FFD Space Warp (new with MAX 2) with Physique 1.15 can produce smoother intersections and deformations at complicated areas such as the shoulders and armpits of a character.  This is very important for polygonal models in which stretching vertices can result in sliver shaped polygons and poor shading.  By allowing the FFD to control the mesh you can achieve smooth blending across links.

1. Place a FFD(Box) Space Warp around the torso area of your character.  The box should be wide enough to extend to past the shoulder muscles of your character.   The number of control points you use for the FFD is important.  You want to use as few control points as possible, but enough to deform the mesh in just the right places.   Try 
putting a row of control points right in the crease of the armpit and a couple rows up on top of the shoulder.  You can fine tune this later by going back down in the stack to the FFD to adjust the number control points.
 
2. Select the FFD and the mesh and apply a physique modifier to both.  Attach the modifier to the pelvis.  You may want to apply physique to the two objects separately, but there are benefits to having them instance the same modifier
 
3. Select the mesh only and add a mesh select modifier to the mesh above physique in the modifier stack.  Go to vertex sub-object level, and select the set of vertices that lay inside any FFS Space Warps you are using.  If you are using a nurbs model you will want to use a NsurfSel modifier to select sub-object control points that lay inside the FFD lattice.
 
4. While in vertex sub-object level, bind the mesh to the space warp.  Now only the selected vertices or CVs will be effected by the FFD.
 
5. With the mesh selected, go down in the stack to the physique level and assign all vertices or CVs effected by the space warp as blue(rigid).  This should be the same vertices or CVs as selected in step 3.  Assign the rest of the vertices or CVs that fall outside of the FFD deformable in the same way you normally assign vertices to links with physique.
 
6. Select the FFD space warp and adjust the vertex 
assignments of the control points so they are assigned to the proper links if necessary.  This can be done in the same way as done using physique with a mesh, only there is less assignments to deal with.  Although less assignment provide smoother surface deformation with the FFD, control point and their link assignments must be thoughtfully placed.
 
7. Adjust the bend tension and bias for the upper arm link, located in the clavicle, until the shoulders stretch and contract as they should.

8. Add a tendon to one of the spine links and attach the control points to the adjacent arms. Adjust Radial distance, Stretch, Pull, and Pinch until the lats look correct when the arms are raised and lowered.  If your character has clavicle motion, which it should to look natural, the tendons might look better if the control points are linked to the clavicles.

ADDITIONAL SUGGESTIONS

Since tendons are no longer needed to fix problems in the armpit area, all other physique controls are free to work as they are designed to.  

Adjust the link scale to make the shoulders smaller or larger.

Adjust the tendon parameters to shrink or enlarge the lats.

Add another tendon on a lower spine link to limit or extend the limits of the lats.

Add Bulge angles for flexing muscles.

Adjust cross section control points for fine muscular detail at bulge angles.

The list goes on.
