While digging around invalid objects in SonED2's object list, I stumbled upon "Special Stage Sonic" Upon placing it in, saving the project, and running the game... I'll just let you watch the video.
Special stages do use a separate player object, due to the different controls and environment. That object also handles a major chunk of how the special stage even works, so yeah, placing it in a normal level isn't ideal.
you've placed an object where it doesn't belong (in this case, an object meant for special stage sonic in the normal level). this is obviously what you get
