I have this error which I fixed by enabling the settings it wants, however I still do not have any blue (water) shading on my desert like in the video.
Any ideas?
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That setting would not have effected what you see when first opening up Unreal. In later versions of UE 5 the “desert” default level was changed to not include water or foliage, so if you’re not seeing it then I would not worry about it.