One of the big differences between first and third person templates is the way orientation is handled. In third person template, the character can run left, right, back, and forward relative to the camera. In the first person template, the character’s arms move with the camera and controller.
On your character, look for a checkbox called “Use Controller Yaw” and uncheck it, though be aware that there are some other differences between the template, so it may not be as simple as just turning that off, but it should solve the immediate problem of your y axis rotation.