So the player will collide with the model when you postion it at/on the model, which suggests its a postioning error when you do that with code. The height issue with the controller is probably due to the changes of the position of the origin of the controller, when did you last update? check the fpscontroller.lua (Leadwerks SDK\scripts\games\) has this line:
--Position camera
camera:SetPositionf(controller.position.x,controller.position.y+1.7,controller.position.z,1)
The origin of the controller was moved from the centre to the bottom so you need to have the camera height set right.