After a lot of messing I found the answer. The group that contains the pipe and joint chain needs Inherit Transform to the unchecked.

Done a screen shot of it all working here:...

Before:
http://i57.tinypic.com/2hnxloz.jpg


After:
http://i58.tinypic.com/3007llv.jpg

I have a complex mech model that has hanging pipes attached between the head and the body. When I soft bind the pipes to a joint chain and rotate the head group up/down/sideways, etc the pipes bend...