So I'm not sure what the problem could be.
Are you sure that your Inventory has an item collection called "Default" with a "Main" purpose? If it does not, it would explain why the items are not dropped.
The Item Dropper drops all the items in that item collection so make sure you add the item you want to drop there.
Also if you which to continuously drop the item, you must tick the "Drop Copies" field, otherwise dropped items will be removed from the inventory.
Finally on the Item Pickup prefab here are the components you'll want most likely:
View attachment 4214
Note that the Item Pickup Visual Listener is what replaces the model of the dropped item once an item is assigned to the ItemObject component.
The item model prefab is set as an attribute on the Item.
I hope that makes sense. I understand that the item drop & pickup is not very clear. I'll look into improving the documentation for that.
Note that this is just the way we chose to do it but you are completely free to use your own drop/pickup system if it makes more sense for your game.