Yes, I am doing this all in one transformation operation. If I perform the skew, then complete the transformation, and then start a new transformation for the warp, the warp works as expected. However, if I do it this way, the warp grid is now a perfect rectangle instead of shaped to my image.
Sorry for the delayed response.
After much searching, I managed to find someone who said the following:
"ah yes CS3 and CS4 have different warp features, i just upgraded to CS4 and unlike CS3 ( and in this video) u can move the "warp handles" where as in CS3, you cannot. In CS3, you can only hold down on the object to warp and drag."
However, I still deleted the preferences as you suggested with no luck. It appears I may just have to deal with this issue until I decide to upgrade.
Thank you very much for your help Trevor.Dennis.
OK. It's too hard to remember all the small changes from version to version, and I obvioulsy didn't know about the Warp drag handles. It's surprising how quickly you get used to a new version of Photoshop's additional feature and functionality, and how appallingly bad it feels if you ever have to use an earlier version.
This problem occurs all the time, and has been an issue for at least the last 3 Photoshop releases. It's not just an issue with smart objects either, it happens with rasterized layers as well.
You pull one control arm and it affects the control arm on the opposite side of the object you are warping - or in some cases a control arm stays frozen no matter where you pull.
You cannot get the desired result through multiple transform operations because the grid no longer conforms to the shape of the object.
Will this ever be fixed?