Here is my tracing setup:
https://s29.postimg.org/p4uq64hdz/capsule_trace_issue01.png
Full image: Google Drive: Sign-in
Note that I added box trace and line trace nodes (and I tried sphere trace before that too). Those work without a hitch. Capsule traces falls through some polygons on the terrain mesh.
Basically that actor-arrow casts to player, gets that playerPhaseLoc variable and sets world location of the default scene root component to that value. So if the trace hit falls through, arrow won’t be sitting on the face of the mesh obviously. And since all other types of traces work, there is definitely an issue with capsule trace by channel in particular.