I noticed the small drysacks aren’t being allowed to go into inventory with stuff in them, they need to be empty which basically renders them useless.

I second this, on PlayStation

The workaround I’ve found for now is to
1.) empty the drysack of its items onto the ground
2.) place empty drysack in the desired inventory slot (jeans for example have 20 slots)
3.) remove all clothing minus the clothes with the drysack in it (jeans in my case)
4.) pickup items dropped in step 1 and they’ll be placed inside the drysack

It’s tedious, however this is the only way I’ve found to get the items IN your drysack IN your inventory