Is it (the Grenade Tool) stationary when you move around? Are you able to move around? Or, does it follow you at a fixed distance from where you can move?
I ask those questions cause it could be an issue with the Handle or something else. There’s a free plugin that might help your issue, but just based on the screenshot I’m not sure what the issue is: Free tool grip editor.
I’m not sure really because I don’t really make tools much.
Maybe it’s because the CollisionGroup is other?
The grenade is inside the model, so it probably has WeldConstraint, this could be causing it to float.