I made a simple terrain level, put a large navmesh bounds on it, and then painted some trees and rocks using foliage (set to Block All in collision settings.)
Unfortunately, the navmesh doesn’t build proper polygons around these rocks – it’s as if it sees the rocks in different places than they are.
I have tried re-building geometry, saving the level and quitting and re-starting, and a few other things to try to see if I could provoke it into working, but nothing makes it good.
Look especially at the crescent in the lower-center of this screen shot – that’s my player start location. The player can’t walk very far…
I don’t know if this also affects earlier engines, but it does affect 4.5.1.
Edit: As asked, here are the painting and instance settings (and the Landscape settings):
