Can't loot during "combat"

A lot of times I cannot target a chest or item on the ground with right stick of my controller, it tries to target object far away even though I am standing on top of a chest. If a chest is close to me it should prioritize that when I move the right stick, if I move the left stick it should prioritize the target instead, this way if I stand still and move my right stick I should be able to target the close chest or item on ground. I play on PC with controller but understanding it should be the same on console.

Unbind any skill from your loot button and bind interact to it.