Quest 3 Multiplayer Issue: Avatars and Network Objects Not Syncing (Meta XR Blocks + Photon Fusion)

Hello,

I'm developing a simple multiplayer app targeting Quest 3 with the following requirements:

Players should see each other's avatars in the multiplayer space.
Players can interact with rigid objects (e.g., painting on walls), with interactions reflected across all clients. (The "painting" feature already works in single-player mode.)

I'm using Meta's Multiplayer Building Blocks for this implementation as it should be sufficient for my use case.

When running the app simultaneously on two Quest 3 headsets:

Each player sees their own avatar clearly.
Players do not see each other's avatars.
Networked interactions (e.g., grabbing objects or painting) do not synchronize across devices.

Using OpenXR (Meta Quest Feature Group enabled) [As Recommended by Meta SDK]
Oculus XR Plugin is disabled
Unity warning shown:

"The Oculus XR plugin isn't enabled from XR Plugin Management in Project Settings"

Added Photon Fusion App ID in Photon settings.
Added Meta App ID in Oculus Platform Settings (for both Rift and Quest).
Set up Unity Platform Credentials for test users.
Application compliance approved in Meta Quest Developer Dashboard.
Uploaded build via Meta Quest Developer Hub; using the same build on both Quest headsets.
Verified no entitlement issues from MQDH logs.

Multiplayer does work when tested between a build in Quest 3 and Meta XR Simulator.

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What could be causing this issue?

Any suggestions or pointers on why multiplayer synchronization (avatars and network objects) isn't working would be greatly appreciated.

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