I was a bit unclear I notice now, this is what I meant:
Doing that solved it for me with the collision detection when overlapping the physics object.
I guess that un-crouching perhaps changes the location of the collision capsule somehow, even if its just by a pixel, causing the physics object to scream “physics overlap!” and go crazy…
I don’t really know.
The only solution I can think of is disabling physics for it when you place it, and enable when you lift it.
Or maybe, when uncrouching, teleport the character a tiny amount on z up.