Issue aligning two point clouds

dsmithdsmapping09

I am trying to align two point clouds using the fit point clouds tool. However, after doing so for some reason the tool will cause the point clouds to significantly diverge. Why would it be doing this? In the past this worked great. What changed in the software? Has anyone used this tool lately with success and would be willing to help me out? In the screen shot below, these point clouds were less that a foot apart before I used the tool. There are plenty of common points, so the ICP method should work, right? I can do a global shift in the z axis, of course, but I actually want the pink point cloud to match itself perfectly to the yellow, even if it warps itself. So why would the tool cause this to happen??