In UE 5.6 there was an issue introduced that broke camera late updates and caused images in the HMD to look “smeared” when using DX12 and the Deferred Renderer. We were able to fix the issue but it was too late for the 5.6.1 hotfix. If you’re working with a source build of Unreal Engine you can cherry pick this change or use UE5/Main.
Let us know if you have any issues using the fix, thanks!