UDK - Problem solving...

No less that 2 minutes after writing that huge blog post I figuired out the collision issue I was facing. It was silly that I missed it really and here for anyone else's benefit in discovering this is how you link your physics asset to your skeletal mesh >.<'

Simply double-click on your skeletal mesh actor within UDK and scroll-down to collision and right there is the place to assign the physics asset file.

 

Now to press forwards in getting some effects working so I can be certain I have a good understanding of them and hopefully by the end of today or at latest the weekend, the general logistics for a working vehicle class (that can be applied to any space-ship within the game) should be complete. Then I can start production on furthering my game concept and some high-quality 3D models.