Preview mesh placement in the perspective viewport (backslash) conflicts with HLOD volume collision, which is set to OverlapAll. Hiding the volume doesn’t help, you actually have to remove it to stop it interfering with the trace.
If I change the HLOD volume to NoCollision, it still appears to generate clusters fine, and allows preview mesh placement, but it might cause other issues.
Static mesh placement (drag n drop from content browser) doesn’t have this issue - could Epic consider changing the preview mesh placement to use the same kind of trace as static mesh placement?