If you turn off “hidden in game” the problem should become a bit more clear. Because capsule component is your character’s root component, all child objects (ie; your hmd and motion controllers) are relative to the center of it. In order to offset correctly you will need to create a scene component that is a child of your capsule amd a parent of everything else. Set the scene’s location to (0,0,-capsule_base_height) and you should be good.