I've seen the same thing. They can look side to side but they won't move? As far as I've seen it works with smaller npcs, and only things like manhacks and such. A model swapped headcrab will need a lift with your physgun and will only hop for 2 seconds after you pull it into the air. But humanoid npcs (or just bigger npcs), I don't think there's a fix to at the moment. I think the issue is related to animations and the physical properties of the models.