I am using Shinbi character. What would happen is the camera would snap to the center of the character when the lights came on. Or if I started using the PlayerStart, the default pawn would get pushed under the level. If I moved the PlayerStart i got the BAD Size icon. I found if you moved the PlayerStart up to around 3000m the BAD size icon final went away.
The camera problem seems to be that the collision for the SM_SkyFloor was set to Block All, which was not allowing movement within. I changed it to No Collision and I also added a simple box collision to SM_Plane_5x5m in the props/meshes folder. The movement now works on the level.