The cabin I'm selling is in Arizona and I have already contacted a QI to facilitate the sale.I've heard insurance companies are being really picky but I'm hoping with a condo purchase this won't effect me tot much.

The unit was completely dirty, damaged and looked like a fixer upper.

Maybe best to wait to see whether Berkeley's brain damaged voters pass anti homeowner ballot measures. 

If you win, they will have to pay the extra expense of the filing fees, etc, on top of what you say your damages are (which would be the cost to hire someone else to complete the job).   

But why would you buy one property in an area you are likely to leave and then have to manage a one-off (not cost-effective)?

If you have a BAD tenant experience on this property as a rental and lose several months of rent and incur substantial tenant damage that is all coming out of pocket whereas if you had even a handful of rentals the performing rentals and the monies budgeted for capex/maintenance/vacancy will carry that sort of loss.

Any suggestions on how to legally put Damage Deposits into a CD to gain interest? 

You have to get the ball rolling before you can expect the snowball effect financially.A few people have quick success and get the ball rolling fast, while others have a harder time.

I figure if these issues happen in the mere beginning/inquiry stages, how are they going to effectively screen/place tenants & manage my properties?

They don't inspect and only discover damages three years later when the tenant leaves.