The gamerule to keep your cyberware is enabled, it's also enabled server-side and client side in the config. But when you die it's simply dupes everything, keeping the stuff in your body but duping another set and dropping it. I'm assuming this is an issue with GraveStone mod but figured I'd open the issue here too.

Cyberware Version: cyberware-1.9.4-1.10.2-beta-0.2.2

Probably right about it being a Gravestones interaction, but I'll look into it. Thanks for the report!

To clarify, are the items being dropped physically dropped or placed in the gravestone?

May be WIRED if you have that installed as well. There is a config setting to disable WIRED's dropping of Augments on Death. The next version will have that removed since it's in Cyberware now.

Physically dropped on the ground, not in the gravestone.