Solved
This is an accuracy issue. The parts are extremely thin compared to the overall size. I fixed it by changing accuracy from relative to absolute and also the value to the smallest I could set it, which seemed to be .006 absolute for each part and also the assembly. Accuracy is a funny thing and cause unexpected issues.
I don't remember but I think on creo 4, you may have to enable absolute accuracy using the option enable_absolute_accuracy yes


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