Friends are invisible.
My friend has joined my lobby and we are invisible to each other. I can see everyone else in the session and so can he but the only way we can see each other is by spectating one and other.
Ideas
I had this same issue. My brother joined my party. Couldnt see his character. At some point i could if i spectated him but after awhile even that stopped working. Then I restarted, he restarted, and I joined his party. Same issue except this time he couldn' t see me either (he could when he joined me).
He was playing on Xbox and I was playing on PC. Im thinking its either internet connection (his connection isnt top of the line but we never have issues with other games + we both could see every other player in the lobby basically) or some bug with either friendslist (i couldnt see his character either when we werent in party, still just saw the floating name) or party players.