If, on a purchase transaction, we are paying off $2k in credit card debt at closing (assuming it's permissible under this particular loan program)...

A) Does this debt have to be shown on the LE?
B) If so, where?
C) If not, how do we get the cash to close to balance?

In my opinion, it seems that other payoffs in purchase transactions were not anticipated, but you would have to show the debt to be paid off in the other payments to third parties (here the property purchase payment to seller also goes) in order to calculated cash to close.

Yes, some of the odd deals are going to be tricky with the way the rules assume the ordinary. I had one yesterday where the full 100% was loaned on a large land purchase and part of the closing costs were financed, thus the loan was more than the purchase price which is supposedly not possible. Normally, the closing cost financed will subtract out of the downpayment. In this case it showed them as a negative in CCF. The bottom line was correct, so I ran with it...what else can you possibly do? !