As said in the title, when I drop my weapon in-game it spins around forwards and sometimes stops. It won't easily stick to the ground like a normal weapon, and clips through it but not going right through. This is one of my first few meshes with Blender, so I'm not really sure what I did wrong. Can somebody please take a look at http://unforgiving-parasite.net/dagger.rar and explain how to fix it? Thank you in advance!

Inertia in the collision block perhaps. Or you had flipped normals on the collsion mesh. If you used primitive shape , like capsules, its probably inertia setting. try increasing it. I'm just being lazy and didn't bother looking at your uploaded files.