The ship linking contacts is none other than your own. It seems that when you play the FFG, if there are other units on your side on link, contact 1001 (Your FFG) starts moving other blue contacts around like crazy.
My first thought was that the Autocrew TMA was on the fritz, but this occurs even with it off. It occurs regardless of contact type (sub, air, etc.) and will sometimes will completely screw you over by dropping contacts as it sees fit. I had a hell of a time doing the Seikan Tunnel mission after it decided to permanently drop the active sonar contact that was the midget sub you are supposed to kill...
I'm inclined think it is not related to the LWAMI mod, but I do not remember the problem occuring with such frequency in the past. Very odd.