You said dedicated server but then mention the host also has issues. Are they running dedicated server and playing on the same PC then? Or is it actually a P2P game? What hardware is the host/dedi running?
The xml from the perk shows it should apply to any weapon with the melee tag, which sledgehammers all have. There is no requirement for only Fortitude weapons, so seems to be a bug if it isn't applying.
<effect_group>
<requirement name="ItemHasTags" tags="melee"/>...
Just bumping this to say it is still an issue in 2.5. The red boundary is still getting rotated but is not properly considered the quest boundary and crossing it will fail the quest, making some POIs unable to be completed as it can cut part of the POI off as "out of bounds" for the quest.
What does that have to do with the OP? And why would anyone with a decent PC want to buy the worse version of the game?
OP: A log also helps as it has your PC specs in it and that can help narrow things down, as well as a crash dump if that happens.