Found an interesting problem on the forums, and had to investigate. Chains, a fully simulated chain. The issue the OP had was with the links penetrating, and testing showed that increasing substeps helped.... but was that it?
Further stress testing showed that the links will still inter-penetrate given certain motion types (like that shown in the example, an animated link lifting the rest of the simulated chain).
Solution was to increase the Collision Passes parameter, *together* with the maximum substeps.