I've read the guides on building and building submission, and then run a search through here. But to no avail. Sorry!
How do you include custom content in your package file? I've seen lots up for downloading on mts2 that don't have a shopping list, but a list of what's included... how? do you just drag them into the .package file?

When you package a lot to a file, custom meshes and custom mesh recolors are automatically included. Recolors of maxis items don't get automatically included, but most lot uploaders will include a seperate .rar with the content that didn't stick in the lot.

this may help: http://www.modthesims2.com/showthread.php?t=228501

Khaki, with seasons patch maxis recolors are included in the package.

If that's so, why is it stressed that we must remove all custom content in our submissions?? I realise it could hurt people's games, but why do some people get by with including custom stuff?

It is the unused CC that it must be removed, some objects are packaged even unused and ALL recolors of an object are in the sim2pack. It is a boring task to do but...to do !
Easier way :
* Package your lot
* MOVE your download folder out of The Sims 2 foloder (desktop for example)
* Install your lot, removig obviously unused recolors with the CleanInstaller. (in doubt let it)
* In your lot remove remaining useless recolors with the recolor tool (dont worry if the packages are erased, they are always in your moved download folder)
* repack your lot
* re test it with the same method to be sure it works

Be patient.... and "the more I fail..." read below

Ah ha, that makes some more sense. thanks!

Also, any custom content that is not shareable must be removed. Each creator has his or her own policy and that policy must be followed.