Just want to also confirm this bug for a separate scene. Having the instancedStaticMesh as a child of a mesh, crashes my Unreal on play. Using a scene as root didnt fix, but moving the instancedStaticMesh to a child of the root did fix it (so its parent was no longer a staticMesh). I was building my instances directly in component tab and contained no BP code. Unreal 4.6.1.
I had exactly the same issue with Instanced Static Meshes that are not root.
The work around is to turn off “auto weld” under physics for the component.
this worked for me, thanks a bunch!