As an update to this issue we have realized it is not the Nanite mesh causing issues but there seems to be a very old bug in the FBX import pipeline where UE messes up the material ID order in the static mesh sections.
A bunch of old threads describing the issue:
For anyone in the future, a different alternative to deleting the asset and reimporting it is to either replace the mesh in the file with something else like a cube with no materials, or remove all of the materials from the current mesh. When reimporting the asset into UE4, this will give you a prompt with the option to “Revert to FBX”. Do that. Adjust the material order in your 3d modelling software like Blender and reimport it into UE4. This will again ask if you would like to "Revert to FBX "…
Hi Shirk.
The specific issue originally reported by Harcarik was confirmed to be fixed back with the UE 4.15 release. What you are experiencing may be a new issue. Please follow our new bug submission process to provide the necessary information so our support staff can look into the issue
https://epicsupport.force.com/unrealengine/s/
Haha, no I’m not gonna leave you hanging on the solution.
Epics answer to this problem is set material by name, this lets your BP assign the correct material to your mesh regardless of the material element order. And this works fine, if your BP only uses one set of materials for everything.
(This is for Maya users as I use Maya)
If you really need to set the material element order for you meshes group and have them all have the same order.
You need to separate your mesh by material, so each …
This issue is CRIPPLING the high-res mesh import functionality for use as an easy way to enable/disable Nanite on objects with more than 2 materials.