From the "Table Collapsing Order Preference" dialog:
Note that the Tournament Director will attempt to follow your specifications given here, but possible tournament conditions may prevent it from following the ordering precisely.
From the user manual (section 12.9):
When a player is locked in their seat, the Tournament Director will avoid selecting the player for movement unless it has no other choice.
When the Tournament Director must move a player who is locked in their seat, the player’s lock moves with the player. Therefore, they will be locked in the destination seat.
Then i was in a hand and knocked out 4 people out in one hand.
This is exactly the type of situation the software is hinting at. You knocked out 4 other players at one time. That's going to introduce a rare table consolidation event into your tournament. Your table, which you told the software to collapse last, and had a locked player, lost half of its players all at once.
Nevertheless, something isn't quite right with your description, so I can't really test this to see if something might be up with the balancing algorithm.
Soon 3 were eliminated, down to 4 tables of 8 players so Table 5 was eliminated first. Then we lost 3 players.
Then i was in a hand and knocked out 4 people out in one hand.
"Down to 4 tables of 8 players." So 32 players (right?). "Then we lost 3 players." So 29 players. "Then i was in a hand and knocked out 4 people out in one hand". So 25 players. At 25 players with tables of 8 seats, you're still at 5 tables at least. A table cannot be eliminated at this point. So something else must have happened.
Just as an FYI, I kept trying this scenario with 29 players and knocking out 4 players at table 1. The software just kept moving players to table 1. Once I figured out something was amiss, I tried with 28 players. When I knocked out 4 players at table 1, the software did exactly the right thing: it eliminated table 4.
And a final thought: regardless of how this turns out, at the time you did exactly the right thing (I wish more people would realize this). The player movement suggestions are exactly as worded:
suggestions. If you don't like them, ignore them and make the movements yourself. I've tried to make that as easy as possible (i.e., drag-and-drop).