I am trying to use grizzlybear's delta force faction. us_army_delta_aor1. In setting up a MP mission, I modified loadouts in Arsenal. For each playable character, I ticked the Override alive ORBAT Loadout checkbox. When I go into mission, it is everyone back to their original loadouts. Can anyone else confirm a possible but with this option?

By ticking the check you sent it back to original and not the way you wanted from what I can tell. That's not a bug.