I've seen the Watch Out action a few times now. It usually happens when your Sim has to walk behind the car after getting out of it. It has happened once when my Sim was leaving and another Sim walked past the dorm (more on the dorm later).
I suspect the Watch Out could be triggered because the car alarm went off. Even if you don't have a car alarm. Just because no one's ever heard the car alarm go off doesn't mean there isn't one going off; there are a lot of sound issues in Nightlife.
Now, the car at the dorm. My Sim created as a young adult in CAS with Pleasure aspiration rolled up a want to buy a car. While living in a dorm. There's no way to buy a car for her without the dormspecifctoolsenabled cheat to place a driveway first. Since I was having the devil's own time keeping her in gold, I really needed those 1500 aspiration points. So.... I used the cheat. Sorry Maxis, you shouldn't have to use a cheat to fulfill a want.
The dorm was Deardorff Dorm at Sim State, so I had room to place a driveway on the right side of the lot after removing the stupid tree that blocks your view of most of the dorm. The driveway itself was near the center of the lot, and was placed as far to the right as possible.
I had an odd bug with a group invited to a community lot. I forgot to end the group before my Sim left for home in my car, and two of the group were still on the community lot. They both got in the car with my Sim. When I arrived at the dorm, I got a message that my dorm was already full and some Sims would move out to make room for the new Sims. Two Sims moved out. The two groupies immediately left and I had two empty rooms, which were soon taken by the Sims who had just moved out of the rooms and had also left the lot but returned.
It may be a bad idea to remove the Watch Out action or alter its behavior. What if someone starts playing kicky bag behind the car between the time you get in and the time the car leaves? How do you get the idiots Sims behind the car to move?
Hook
I haven't actually removed the "Watch out" action. The whole idea of the routine is to get sims out of the way when a car is parking or driving off, which it still does. The only thing different is it waits to see if the sim moves off by themselves first. So you will still get the "watch out" when needed.