I've never used anything but homemade MMF, and it's always works great for me. In fact, I've never even tried store bought fondant. If you want to give it another try, I have some ideas.
Only use 2 Tablespoon of water per 16oz bag (use mini marshmallows). If you add Lorann Oil, adjust the water so that only 2 TB. of liquid are going in.
You don't have to sift the powdered sugar. I never have.
If possible, make the MMF right before you cover the cake, and then put it on immediately - don't let it rest for a day. MMF just isn't the same the second day. I've had the same problems you're describing when trying to use old MMF.
Skip the cornstarch, and just use white Crisco. I've tried cornstarch a few times, and it just doesn't work with MMF.
Here is a link to the instructions for MMF that I was given when I started. I've never had to try anything else:
I hope this helps!