Its not the capsule that you don’t want to rotate, sounds like you want to stop the ParentRelativeAttachment from tracking the HMD, the character mesh isn’t attached to the capsule itself.
You can adjust settings on the Parent Relative Attachment, or even detach your skeletal mesh from it entirely if you want. bIgnoreRotationFromParent in the Parent Relative Attachment will decouple it from the rotational influence if you want, retaining positional.
As for scaling, you need to calibrate to the players height, either by scaling the mesh, or by scaling WorldToMeters so that the tracked information downscales to match your mesh, either way will require some calibration pose or manual scaling selection from the end user generally.