When I enable “Collide with Environment” for Chaos Cloth, the collisions with capsules don’t match what’s shown in the viewport. I found that when Chaos Cloth gathers colliders, it treats capsules as if they are aligned with the X-axis. If I change the code to treat them as Z-axis aligned instead, the problem is fixed—but I’m not sure whether this will cause other side effects.
Yes this does look like the correct code is to have it as the Z Axis not the X. We don’t think there will be any side effects to this alteration and we’ll look to get this fixed internally.