Chaos group told me that the importing and placement of proxies is a bug they are working on. I was able to work around it by creating a new file, creating a new proxy and then copy and pasting it into my model.
After that I had huge problems rendering. The Rendering spawner just would not start or respond, or the rendering would just stop in the middle somewhere. Then I noticed on one render that got to about 50% that I could see a pattern on something that shouldn't have had one. It was my displacement map! When I turned my displacement maps into bump maps it rendered without issue. Hopefully this is something Chaos will address in the future because the displacement looks much better than the bump.