Just an update, I am using the latest version of Oculus runtime 5.0.1 and UE4 4.7.6.
So far I still cannot load up the editor when I am running in Direct mode, Extended mode with the editor loads up fine.
If I package the game in 64bit development from the editor and run it then I still have to use the extended mode although if I build in 32bit shipping I can then run the game in direct mode! This is all when I have the NVidia 970M card as the main card.
Does the engine run in 64bit? If so is there any way to run it in 32bit?