Sequencer to Animation Sequence Changes Skeletal Mesh Material Appearance

I am animating a mesh in Level Sequencer and then saving the animation via Bake Animation Sequence as shown in the image below with the Record in World Space selected.

Two issues:

  1. If I DO NOT check Record in World Space an animation sequence is created but it doesn’t actually save the animation. The result is just the dark blue hand in the default position. Is this what is supposed to happen?

  2. If I DO check Record in World Space the expected animation sequence is created but the hand is now a light emissive blue… seemingly overwriting the selected material. How can I correct this?

Method for creating Animation Sequence

Options
image

Result when Record in World Space is checked