FTR I fail to see how MK breached the policy with their FFA Cup kits. In history, Melbourne Croatia Soccer Club have contributed more to MK, and football in Australia, then I daresay any other sponsor featured on an FFA Cup kit.

As MFAW's post showed, the sponsor was accepted and approved as a legitimate sponsor:

After communication between the Club and the FFA, the club demonstrated that FFA Cup major sponsor Melbourne Croatia Soccer Club Inc. is acceptable under The National Club Identity Policy (NCIP). The federation then released a memo on Thursday 24th July (five days before the match) stating that they would “only approve a Club’s Playing Strip as it appeared in their Member Federation 2014 league or cup competition, at the time of qualification to the Westfield FFA Cup 2014.”
And the note from the NCIP on the issue (clause 4):

A Club must not use, advertise or promote (or permit any other person or entity to use, advertise or promote) any ethnic, racial, religious or political identifiers in connection or association with the Club. The prohibition in this clause 4 does not apply to the legitimate promotion of a Club Sponsor or the use of a name, logo or emblem that has been approved in accordance with clause 3.
So Melbourne Croatia Soccer Club was approved to be a legitimate sponsor, but the reason the FFA originally gave for not allowing MK to have them on their kits was they wouldn't allow new kits, and new sponsors, for "any" team for the FFA Cup (but let's ignore the fact that Brisbane Strikers had a new kit with new sponsors for it, shall we FFA?).

Let's think about this for a second though - the FFA originally told MK that no new sponsors would be allowed on kits for the Cup. Imagine you're Broadmeadow Magic, you go to, for example, Centennial Coal and say "hey, we're on the telly box next week for the FFA Cup. Sponsor us" and Centennial Coal say "wow, that exposure. We will give you $10k to put our logo on your jersey". Sounds like the ideal situation, right? An extra sponsorship for a one-off game, you can use those funds to hire caterers or maybe invest back into facilities or grassroots or whatever. And the FFA claim that it is not allowed, and will be prevented from happening? You wot m8? That actually sounds like the opposite of what the FFA would want to happen. If that hypothetical sponsorship thing happened, the FFA should be doing fxxxing backflips that they've created something from nothing (the cup) and the game is growing because of it.

So then after all that, the FFA a week or two later said "nah, it was the NCIP that stopped MK from doing it".

So tl;dr - FFA approve sponsor, say it passes the NCIP. FFA deny MK to use sponsor, say not allowed new kits and sponsors even though other teams had new kits and sponsors. FFA then said breached NCIP. Horsesh*t the lot of it.