So that means that there is little chance that it is caused by a hidden morph.
How do you pose your character's genitalia?
Do you select each bone (Shaft 1, shaft 2, etc...) and change the Bend, Side-Side and Twist properties manually ?
Or do you use the "preset" sliders in the Parameters panel (with the Dicktator Genitalia figure selected) ?
With option 1, I tend to reproduce the same problem as you by setting the Bend slider of the "Shaft 1" bone to the minimum (-80). It's never too good to go too extreme with these properties.
On the other hand, by playing a little with the 3 sliders "Shaft Bend Curve 1", "2" and "3" I can more or less reproduce the pose of your genitalia without this "depression".
But in my opinion, the pose is not very natural from the start, the "Shaft 1" bone should not be lower than -60. Here your genitalia is too "straight" and too close to the belly. It should be a little more arched (Bend) around Shaft 2, 3 and 4 bones.