Well, BillyBob is always a little confused also as to how moisture can get past the space blanket(sb). Now sweat occurring with all of that insulation, from maybe being way past warm enough, is always a real possibility. ( a jarbridge under the HH OCG pad/sb is a lot of insulation. Probably close to what kwpapke used to stay warm at minus 27 ) But still what is always surprising is how it(sweat or vapor) gets down past the sb into the undercover(UC). This has never happened to me, but it has been reported a few times by others.
I am actually leaning towards your 1st theory: your breath hitting th high sides of the undercover as you side sleep. A sb is a VB, for sure, but it is a little different than VB clothing or liner bags. It is not sealed off where the sb meets the hammock/undercover. Even though it has not happened to me, from 14F to the 40s, I can see how if you were sleeping on your side you could breath right into the highest areas of the under cover. If so, condensation would be almost guaranteed. If it happened, I see nothing to keep it from running right down the side of the UC into the bottom. Of course, I'm just guessing, as I have no experience with this problem. My worst case scenario is a few drops collected in the low point of the sb, which got neither me, the hammock or any insulation wet.
One other theory has been proposed and could have some merit: the air trapped between the sb and the UC has a certain amount of humidity/vapor in that air. And it is at least somewhat
trapped down there. As the temperature drops through the night, and other conditions are just right, that vapor condenses. But what this does not explain is why a few folks have had consistent problems with condensation, and some of us rarely or never do. Which makes me not that sure that this could be the explanation. But who knows? If it is the problem, I don't know what could be done about it.
But as for the vapor from a persons body getting past the sb and condensing in the UC, I don't see how it could. Unless it is condensed breath running down the UC sides. To check out that theory, you might look into a Shug style breath/frost (condensation) bib. You are bound to get a lot of condensation on that. It is meant to prevent condensation on your sleeping bag neck/face area. But if it is your breath condensing and running down into the UC, that frost bib might be a big help. Just adjust it so that you breath right into it as you are sleeping on your side or back.
Let us know if you figure it out!