The key thing is you must have your character that is picking up the object as the "player" entity, meaning that your player code must have:

player = me;

The carryItem action in the script you attach to your objects to be picked up by the player depends on this to update its position.

So make sure you character player code has the player=me; in its action, and then assign the carryItem action to the object you want to be picked up by your player, rebuild entities and your good to go.

Also in the demo folder there is a screenshot of the behavior panel so you know what it looks like before you call it up in wed.

Let me know if you have anymore problems.

-raiden