Help me understand why samples are doing this...

I'm in front of my Touch now, so entirely from the hardware:

Go to SAMPLE EDIT and select PROGRAM
Now hit the pad you wish to edit
Set 'Slice' to Pad'
Now make the edits using the waveform if you wish
Hit the next pad and make different edits

The changes you make here only affect that pad (well, layer 1 by default).
Setting back to TRIM will allow you to edit the reference file, PROGRAM is for editing pad instances.

Just loaded up a blank program on the LIVE and went directly to the program page and under LFO MODULATION i see the Mute Group. There the mute group parameter is set to OFF by default.

Did you perhaps load up a temp let from a program rather than starting from a blank slate/program?

Ahh I figured it out. In the program edit's modulation page for each pad, all the pads are set to mute group 32 even though they don't appear to be in any mute group via the mute group mode (the one found under the main menu page). There are multiple places to set this functionality, apparently.

When you record a sample using pad hold it automatically sets the mute group under LFO MODULATION to 32