How should the faithful (me for example) should understand what happened?  Certainly, he had all the graces available to a Catholic and was raised in an assumably pious family.  So, those graces could not prevent him from committing the worst of crimes?  

  He explained he gave into lust, but I believe it goes beyond lust - a child who he was related to was the victim.  If it was demonic possession, why wasn’t he protected by all the sacredness, prayers, and again graces that surrounded him?  Could it be an extreme weakness of character?  But even then, that doesn’t seem to account for the severity of what occurred. 

  Was the vetting process in bestowing holy orders corrupt?  How should a Catholic understand why someone so bathed in tradition could commit such an act? 

You can give someone every advantage, increase their chances to the Nth degree, but you can't decide for them to choose good or evil. That's the essence of Free Will.

One Word:  Judas.  Talk about someone who had all the graces available, as he was in constant close proximity to God Himself, and the other Apostles, etc.

I've talked about this before on other threads.  Parents can do everything "right", but none of it is a guarantee of anything due to ... free will.  We know of course that Our Lord did "everything right" with regard to His formation of Judas.

With that said, there's probably also some psychological stuff that went into it.

So between environment, temperament, experiences, psychological tendencies / issues (some rooted in physiological causes, others not), and throw in the magical unpredictable exercise of free will ... and there are no guarantees.

Nevertheless, even in the case of Stafki, we have to keep in mind that if we had been born into his family, with his temperament, his psychology, had all his experiences, etc. ... would we have ended up any different?  God alone knows, and this is the true sense of "who am I to judge?"  We obviously judge WHAT he did as gravely sinful, immoral, deviant, etc.  But God alone will sit in judgment of him with regard to his degree of sin and culpability, etc.  So when Bergoglio abused "Who am I to judge?", it was in line with the same error that appears in Amoris Laetitia, where some lack or diminution of culpability in the internal forum can be used to justify the sins committed in the external.  While God can judge a diminution of culpability in the internal forum, even we can't do that for ourselves.  Much less can we use a diminution of culpability for past sins committed to justify continuing to commit the same sin.

But, anyway, there's no reason to judge the Stafki parents as if somehow responsible for what their son ended up doing.  We don't know.  Only God knows.  As Matthew said, it's entirely possible that they did everything right, but that their son just made a series of sinful decisions on his own that led to this, combined with some obvious psychological problems.  When dealing with incestuous pedophilia, there has to be a psychological issue going on there ... whether he suffered from some issues related to his physiology or whether these psychological issues were caused by some past sinful decisions, God alone knows.  Yes, I disagree with the Dimonds that all tendencies to immorality are simply the result of sin.  We see a huge correlation that many sodomites, especially pedophile sodomites, were themselves abused earlier in life ... and that undoubtedly leads to psychological issues that contribute to their tendencies later in life.  Some people, for instance, are prone to alcoholism, whereas others can drink to excess for years and not become alcoholics.

  How should the faithful (me for example) should understand what happened?  Certainly, he had all the graces available to a Catholic and was raised in an assumably pious family.  So, those graces could not prevent him from committing the worst of crimes? 

  He explained he gave into lust, but I believe it goes beyond lust - a child who he was related to was the victim.  If it was demonic possession, why wasn’t he protected by all the sacredness, prayers, and again graces that surrounded him?  Could it be an extreme weakness of character?  But even then, that doesn’t seem to account for the severity of what occurred.

  Was the vetting process in bestowing holy orders corrupt?  How should a Catholic understand why someone so bathed in tradition could commit such an act?

How about infiltration.... you know "The Plot Against the Church"

The great French Catholic writer, J.K. Huysmans, wrote a novel about de Rais called La Bas. It also chronicles satanism in France during his day.
His later novels, En Route and The Cathedral, are autobiographical accounts of his own conversion to Catholicism.

Did not know that. Thank you. Worth reading? 

One concerned woman told me she was grilled in the confessional by a certain SSPX priest for having discussed the Stafki case with her adult children, who in turn have children in SSPX schools, these families who have all been long time attendees and supporters of the various chapels, contributing countless hours of volunteer work, whose children have attended SSPX schools, who continue to put money in the collections, etc.

The confessor asked, did you have reason to discuss such a serious matter? Does it directly involve you? Even if it is public knowledge in a legal sense, did you have any serious reason to spread it?

Now ask yourself again, how do we make sense of the Stafki "incident". Let's not be naive. The problem was not merely the younger Stafki and his personal culpability for these horrendous sins. We cannot know these circuмstances.

But there is another problem that we can see objectively and discuss openly and fairly. It is the systemic problem within the SSPX, and this systemic quality provides a cover and, for the predatory, an encouragement, for they know that their blind, obsequious confreres will serve excellent police to gaslight the laity as perpetrators of gossip rather than victims of evil. "How dare you discuss our gravely immoral problems! They do not pertain to you. You rather are the one who creates the problems by not shutting your mouth! No, continue to give us money and entrust your children to our care without one question. Otherwise, you detract!"

If these priests had more humility, they might also be able to admit the truth in front of their eyes regarding their own fraternity.

The traditional faith is certainly the best remedy against our sinful nature, but the way is narrow, and the faith is not a magic pill.

Confused about how such a subject makes it into the confessional, unless this woman was led to believe it was a sin to discuss “without reason,” and felt the need to make mention.

I attended a parish meeting the day after the SSPX communique, which began with, “First if all, no tape recorders unless you have received permission…”.

I was having flashbacks to the Fr. Rostand era, who began many of his anti-Resistance damage control conferences with the same warning.

Paraphrasing from memory (since no recording was permitted!), it was then explained that moral theology must regulate our response, and that dictated that the Society only inform those they considered had a need to know.  As regards us, we were told that just because something appears on a police report does not mean it is public (false).

The gist was that someone in another town uninformed about the event has no need to know, suggesting it would be detraction to inform such people.

What was not explained were circuмstances which dispense from detraction, one of which is called “notoriety of law,” which states that if a man is convicted of a crime, he has surrendered his good reputation, and cannot be detracted.

I can envision someone objecting that the priest has not yet been convicted, and therefore notoriety of law does not apply.

Against that fact is the confession of the priest, which represents an even clearer surrender of reputation than conviction (which could always be based upon an unjust ruling), and the fact that conviction is imminent.

So notoriety of law clearly exempts any from the sin of detraction (good taste being something else altogether), unless the communication is motivated by hatred, jealousy, or some other motive sinful in itself.

My wife and I definitely came away with the impression that the purpose of the meeting was damage control.

If it wasn’t, it would have been held sooner (ie., prior to the CM article). 

When it came time for Q&A, one man asked (referring to the atrocious non-communication) what the Society had learned, so that when the next case inevitably occurred, they could handle it better. 

The response was palpable surprise, resistant body language and non-admission of fault: The whole room seemed taken aback that anyone would suggest the SSPX had blundered the communication piece of this whole episode. 

The long and short of it was that the SSPX was right not to tell anyone they considered didn’t have a need to know (but how would they know what families this first visited in the year he had been on sabbatical?), and neither should we (with a suggestion that to do so would be detraction), which is, I suppose, how a woman like this ends up needlessly in the confessional.

PS: If any would like me to post a pic of the moral theology manual discussing notoriety of law within the subject of detraction, just say the word.