Having died with corail, it equips the backpack back in curio slot just fine but the backpack does not respond to hotkey afterwards , and cannot be removed (grabbed with cursor). If corail is toggled to not equip automatically, it can be moved as an item but still not accessed with hotkey, and if equipped manually or via right click is un-removable again and still unresponsive to hotkey.

Alright so basically I wasn't aware lockBackpackIntoSlot was true, combined with entering into a #curios:curio slot instead of #curios:back slot, means it couldn't respond to hotkey or be dragged out.