Resolved How do I setup Physics for my use case

The limitation we have in entities 0.6 is that you cannot run physics simulation as part of the prediction loop. As long as all the physics simulation happens on the server and it sends the positions the client uses it should be fine. If you need some approximation of motion without collisions you could use a client-only system in the prediction loop which updates the position based on the velocity without any collision logic - but it is obviously a very rough approximation.

If you want the ghosts to be possible to raycast against on the client side the easiest is to make them kinematic with physics velocity 0 on the client. You can do that by creating a client-only system which adds `new Unity.Physics.PhysicsMassOverride{IsKinematic = 1}` to everything which has a `PhysicsVelocity` and `GhostComponent`.
You would also need to be careful to make sure PhysicsVelocity is zero on the client or the ghosts will be moved by physics. If you never synchronize PhysicsVelocity it should stay zero, so easiest might be to use a separate component for velocity if you need it for some rough approximation of prediction on the client.