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When a physics object does enter a block or entity -- it seems to get pushed out at very high speed.

I fixed a bug a few weeks ago that would cause physics entities to be pushed out of some entities at a very high speed. Do you get the same problem with level geometry, too ? (In that case it is something different)

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This high speed coming out of a block is also a problem if you are using phent_setmaxspeed because the body ends up with zero velocity because it reached the max speed.

That's a good observation- it explains why sometimes the entity gets stuck in an invalid spot.