Remove your glasses. I had the issue where I had the tac gas mask on, with tac goggles, tac helmet and nvg. Wouldnt give me toggle light option in radial dial unless glasses were removed, even tho they are underneath my gas mask... very silly design.

Had this last night. One shot a dude in the head, he falls half way into a wall, I can't grab his shotgun, even after cutting him up which sometimes is required to retrieve items.

Good it wasn't only me experiencing this odd programming change.

Worked for me every time. You may have had a d'sync bandage.

Yep, this is what I am currently doing.
Wouldn't be good if I got sniped for taking too long to loot tho haha.

I have come across when downing a zombie that it wont show anything in the vicinity unless I'm in the perfect position. And also times where it takes a couple of seconds while standing over a dead zombie checking vicinity that their items show up.

I get the normal Press A to put into hands or X to Inventory - both do nothing.
So I ran into some dude and he told me you have to press and hold A on the zombies item, then RB to move to your hands, then release A.