So currently I just have a normal spawn location part, but I’ve set CanCollide to false. Every couple of times I spawn, my character ends up in the ground. I am not sure if this is a bug and was wondering if anyone else is experiencing it. If you have, do you have repro steps? If you have a solution let me know as well.
I usually fix these kinds of problems by changing the location of the spawn location part. In your case, I would move the part more upwards from its original position if you did so, test if the problem still occurs and if it does, move the part even more upwards until you cease to spawn underground.
You can make the floating spawn location part invisible, remove its textures in order to mask it.
Maybe putting a large CanCollide part inside of the terrain and under the spawn location would deter the player from spawning under the spawn location.