Hi,
I suspect that assumptions about a vertically oriented capsule in mesh offset code is messing with mesh translation. It appears that capsule itself is oriented correctly (based on “show collision” result you posted, though it would be nice to confirm that with a shot on both sides).
Try overriding UCharacterMovementComponent::SmoothClientPosition and SmoothCorrection to do nothing in your own component and see if that makes a difference. That is only run on client and is only thing I can think of that is messing with offset on client and not server.