3ds Hierarchy Snaffu

[miro42]

I'm doing a super secret project which will take me until the end of time but not if I don't get this figured out. I'm basically making a cape and right now I'm working on the guides/helpers/bones, whatever you want to call them. But when I link two of the objects the child goes bonkers. I've tried looking at tuts and whatnot on the web but every one just shows you how to link, not why things go wrong so any help would be super duper.

Here is a picture before I link:

Then I link it and it does this:

 

Okay the images don't seem to be posting so I guess I have to describe what happens. After I link the child scales larger along the x and scales small on the y flattening the box. When I hit undo it removes the hierarchy but the box still stays squished. Does that make sense?

 

Oop! Got the pictures to show.