Collision issue with multiple objects in blueprint

I’m following the character blueprint setup in ShooterGame. I’d like character capsules to have collision with each other, but for weapon projectile traces to be called on the character mesh. I’ve found when using the settings from ShooterGame, with the collision ObjectType set to Pawn for both Mesh and Capsule, that capsule collision (Block) does not work. If I set the Capsule ObjectType to something else, like WorldDynamic, then the Capsule collision does work.

Is this a bug, or am I doing something wrong? Do I need to keep character Mesh and Capsule as different object types for collision block settings to work correctly?

Here is a screen of the settings from shooter game, which character capsule collision does not work: