The spawn collision handling doesn’t make the spawned actor ignore anything, it just forces it to spawn even if something is in the way (e.g. your player character’s capsule component), but in that case it will get stuck since the physics are not yet awake at spawn (if they were it would send either your player or the grenade flying wildly at a million miles per hour).
So based on what you said, it is definitely getting caught in your player’s capsule component at spawn. What you can do to fix this is by opening the blueprint for your grenade and setting it’s collision to Custom and setting ignore Pawn (you have to do this on both the grenade’s capsule component if it has one and on the static/skeletal mesh component). You will also have to make sure that your player character’s collision capsule is still set to object type Pawn (since I suspect you might have changed it’s collision settings while trying to fix this).
Hope that helps 