Also, the modifier stack in your first screenshot is a mess. This is a really bad way to work, since any changes below the top modifier will often cause bad results. Many modifiers are dependent on the vertex order staying the same. If you change it, you're going to get all sorts of bad things. It's best to work as "flat"…
In the next update I will include a function to copy the Smoothing Groups to a new EPoly modifier, so once you are done with the collapsed object you simply click on a button and then drag/drop the new EPoly modifier to the original object. Or perhaps it will have a feature to decide to which object to add the EPoly…
The most flexible/best practice method is to use the sweep modifier and instance it onto each circle. (Right click copy the modifier and paste-instanced onto the other objects modifier stacks) Possibly a bit on the advanced max usage side but a really good habit to get into
looks like garbage smoothing groups, try adding a sooth modifier on top with auto smooth checked in the modifier. That should assign smoothing groups automatically based on angles. Once you are done with the modeling you can tweak them yourself in the editPoly modifier if needed.
I would recomend you looking into the addon "modifier list" https://blenderartists.org/t/modifier-list-1-3-1-improved-lattice-other-stuff/1147752 It allows you to add the modifier with a gizmo on the vertex you have selected much more easily
If you're using Max and the Edit Normals modifier, then all you have to do is select all the normals (Ctrl+A) and press the Reset button in the modifier.
You can export the cage from the projection modifier and use all of the standard edit poly tools, then import the cage back into the projection modifier.