I've also submitted this issue to the GitHub for Wearable Backpacks.

When using both mods together in 1.12, upon making the titular compass, it was a gray wearable backpack, and not the compass. It's such a bizarre conflict of mods that I'm not sure why the hell it would do this, so I figure perhaps there's something going on with one of the mods that should be looked into.

Should be fixed with the next release in the next couple days.

Fix has been released in version 1.5.0. Let me know if it persists.