When i want to decorate tree, i have option decorate and chop, tho on Decorate, my character(Wendy) crouches and does nothing. I have tried without any mods since they can cause such issues, and without backpack. I am the host of the server, guests can all decorate without any problems. I have managed to decorate just once i think it was 19.12.2016, not sure if you were patching then. Since then i have performed several tests, and hosted several games, still couldn't decorate it.
Well, i am not sure, i have selected Wendy, made festive tree planted and i had just option chop and decorate, on decorate my character would crouch and nothing would happen.