Hello there @phil123456!
Checking around the community, similar issues have popped up from time to time. Nanite does not render UVs in a traditional way, it clusters the mesh into its own internal representation, and tends to ignore any unwrap present.
To fix the global Nanite switch not working, you can enforce it by changing the engine.ini file in UE’s install folder, with the following line:
[SystemSettings]
r.Nanite=0
It’s also recommended to keep your UVs in order to avoid the smudge-like effects. Please ensure your islands have good spacing, avoid placing seams on prominent edges visible to player’s views, and use consistent texel density across maps.
You can also modify Nanite settings for better results, like altering Proxy Triangle Percent values per object. For further details on this, please check the documentation below: