In terms of the Editor viewport, you will see all actors of any levels that are currently set to visible, this is normal and would have no bearing on any streaming functionality. Click on the “Toggle Level Visibility” Eye Icon to the left of the level name to check if the actors are in the correct level(s).
The cogwheels appear only if there is something delaying the transition - this could be an intended latent action requiring confirmation (something that would have to be set up, therefore not relevant in this instance) or the transition scene still loading (make sure this sublevel’s streaming is also not set to “Always”).
On a side note, the default pawn should be deactivated (Set “Start Players As Spectators” to true in Game Mode) - otherwise the game will spawn that pawn in the root level automatically (and you might simply start falling through the world, as no levels might be loaded at this point).
The Pawn Handling feature (example map 15) will allow you to take full control of what you want to spawn, but for the time being, Auto Possess should suffice (i.e. in the game level as well as in the transition scene).
Could you show me a screenshot of your setup - levels tab and the main settings of the LSS Actor (level names)?
Are you starting the level transition from a blueprint node or the auto play setting in the LSS Actor’s details?
Check that any sublevels (including the transition scene) are set to not be initially loaded/visible (click on the “Summon Level Details”).