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I can no longer possess things for some reason? The possession animation begins, but then I immediately get booted out of the thing I'm trying to possess. The enemy then becomes dizzy.

Sounds like you are holding the "use" button when taking control on an opponent.

To take over an enemy, simply walk into it or jump into it when it is unalarmed. Do not press the "use" button as this is how you get out of a possesed enemy.

Oh, ok, thanks!