I have my player mesh separate from the actual capsule and it lerps to the capsule position to smooth things out, however, a problem lies in that this makes it unaffected by any rotation in the actual controller caused by my camera rotation, unfortunately every attempt to add rotation as resulted in the character spinning
the code that makes the player controller rotate with the camera is a simple
player.Rotation = Rotation;
while the code that handles how the pivot for the model rotates is
Vector3 newRotation = Rotation;
newRotation.Y = Mathf.LerpAngle(pivot.Rotation.Y, Mathf.Atan2(-inputVector.X, -inputVector.Z), (float)(25 * delta));
pivot.Rotation = new Vector3(pivot.Rotation.X, newRotation.Y , pivot.Rotation.Z);
is there any way to make my player affected by the rotation, I can give more info if necessary
edit: I should probably also add my camera is in a fixed position that can be dynamically altered by different volumes, so nothing input related for the camera will work

I have found something for C# too (but don't trust it too much, i have no knowledge of C#).
Let me know if we have the same problems.

I make my solution (on GDScript) here, not sure if related to yours aswell:
https://godotforums.org/d/35564-transform-basis-rotation-player-mesh-and-camera

This is a full-script in C#, dont know if resolve your problem, but should be related!

using Godot;
using System;

public partial class CharacterController : CharacterBody3D
{
	public const float Speed = 5.0f;
	public const float JumpVelocity = 4.5f;

	private Camera3D Camera;
	private CharacterBody3D Character;

	// Get the gravity from the project settings to be synced with RigidBody nodes.
	public float gravity = ProjectSettings.GetSetting("physics/3d/default_gravity").AsSingle();

    const float MouseSensitivityX = 1.0f;
    const float MouseSensitivityY = 1.0f;

    public override void _Ready()
    {
		Camera = GetNode<Camera3D>("Neck/Camera3D");
		Character = this;
    }

    public override void _PhysicsProcess(double delta)
	{
		Vector3 velocity = Velocity;

		// Add the gravity.
		if (!IsOnFloor())
			velocity.Y -= gravity * (float)delta;

		// Handle Jump.
		if (Input.IsActionJustPressed("ui_accept") && IsOnFloor())
			velocity.Y = JumpVelocity;

		// Get the input direction and handle the movement/deceleration.
		// As good practice, you should replace UI actions with custom gameplay actions.
		Vector2 inputDir = Input.GetVector("Left", "Right", "Up", "Down");
		Vector3 direction = (Transform.Basis * new Vector3(inputDir.X, 0, inputDir.Y)).Normalized();
		if (direction != Vector3.Zero)
		{
			velocity.X = direction.X * Speed;
			velocity.Z = direction.Z * Speed;
		}
		else
		{
			velocity.X = Mathf.MoveToward(Velocity.X, 0, Speed);
			velocity.Z = Mathf.MoveToward(Velocity.Z, 0, Speed);
		}

		Velocity = velocity;
		MoveAndSlide();
	}

    public override void _UnhandledInput(InputEvent @Event)
    {
        if (@Event is InputEventMouseButton)
		{
			Input.MouseMode = Input.MouseModeEnum.Captured;

		} else if (@Event.IsActionPressed("ui_cancel")) 
		{
            Input.MouseMode = Input.MouseModeEnum.Visible;
        }

		if (Input.MouseMode == Input.MouseModeEnum.Captured)
		{
			if (@Event is InputEventMouseMotion MouseMotion)
			{
				Character.RotateY(Convert.ToSingle(-MouseMotion.Relative.X * (MouseSensitivityY/100)));
				Vector3 CurrentCameraRotation = Camera.Rotation;
				CurrentCameraRotation.X += Convert.ToSingle(-MouseMotion.Relative.Y * (MouseSensitivityX / 100));
				CurrentCameraRotation.X = Mathf.Clamp(CurrentCameraRotation.X, Mathf.DegToRad(-90), Mathf.DegToRad(90));
				Camera.Rotation = CurrentCameraRotation;

            }
		}
    }
}