First, this line makes no sense. You do not need to set an absolute velocity by scaling it by the current elapsed time. Velocity will be time-integrated to position later.
You don’t show how it’s rotating which is likely you’re changing the Transform or just instantly changing it causing overlaps. Because the physics system cannot use velocity adequately to keep them separated, because you’re stomping over it, it gets into an impossible situation.
Changing it to use Continuous Collision Detection might help but it won’t stop the overlaps you’re causing.
Ohhhhhh right!!! The rotation, I completely forgot about that, I’ve checked and you were right, I fixed the code and it’s almost perfect now, Thanks for answering & the tips as well, Really appreciate that.
Have a good day