Alright, I was able to find a band-aid fix for this issue. Meaning, I solved the issue to get everything working the way I wanted it to without resolving the actual cause of the issue.
The Problem was: “Orient Rotation towards Movement” clashes with “RInterp To” + “Set Actor Rotation” and causes the character to jitter slightly. I believe this wasn’t and issue until I updated the Engine Version to UE5.3
My band-aid fix: For my “Move Right” input axis, instead of using “Add Movement Input” I now use “Add World Rotation” with the Capsule Component as its target and using the Input Axis multiplied with the Rotation rate as the Yaw.
This does not fix the actual issue of “Orient Rotation towards Movement” clashing with “Set Actor Rotation”, but for now this works for me. I hope this helps people with similar issues, but again, the initial issue is still unresolved.