Don't know if it's me who is the problem or if what I am doing is impossible for source engine to handle. I am animating a banner falling to it's left side and intending to use in Hammer (Source Engine Map Editor), or more specifically Garry's Mod. It's a cloth simulation that I turned into shape keys and exported that animation as a .dmx. Now the problem arises when I open the model and play the sequence only some vertices follow the animation the others just seem to "fall" to an invisible surface as if there was a floor underneath. I guess it's best is if I just show you.

The shape key animation in blender: https://gfycat.com/idealisticnaturalalligatorsnappingturtle

The same sequence in Model Viewer (hlmv):
https://gfycat.com/cheerfulwetfrilledlizard

Also I guess it wouldn't hurt to paste the .qc that I compiled it all with:
https://pastebin.com/1n3K473p

I compiled it with Crowbar and other then thousands and thousands of warnings such as:

WARNING: Encountered vertex in delta state “{animation_name}” with a component larger than 8.00! Clamping…

there was nothing else. If you would like me to go step by step please do tell because I am desperate for help at this point.