I'm having trouble setting the config.autoAct to 0 and making it so that the items aren't automatically picked up by the player, but instead picked up when the player presses the activate button. It seems that no matter what I do, the item is either still automatically picked up, or not at all. Any advice is appreciated, thank you in advance.
Unfortunately config.autoAct only applies to interacting with sprites, not collecting items, and there isn't an equivalent config option for items.
If you write a collect event in an item script it will override the default collect behaviour, so that's an option.