Okay, I have two problems with this puppet, both of which can be seen in this gif:
First, the hands get rotated around the wrong direction when walking. The arrows are to show the problem... they should be pointing to the direction of travel.
The second problem is the funky distortion of the feet.
The puppet file is here: http://www.studiotachyon.com/downloads/Grey_puppet.zip
Looks like the problem is in your source art. In the Left Profile view, the head points left, but the body points right. Same problem in the Right Profile view.
Thanks, Dave! That fixed one of the two problems (and showed what a complete idiot I am, too! )
However, the funky foot action persists...
Partially fixed puppet: http://www.studiotachyon.com/downloads/Grey_Paritally_Fixed_puppet.zip
Okay... shoulda played with it more before posting... Because I had my head on backwards, I also had my joints... er... out of joint. (Sorry for that bad pun. It's 2 am here in Georgia...)
Had I done the tinkering I did after the previous post BEFORE I posted, I would find everything works properly now. Thanks again, CoSA_Dave!!