Hey man have you tried to separate each rotation so they are both attached to the same controller but perform their matrix multiplication separately. I'm not sure when UDK normalized the local or global vectors but that may be your issue. Have you also tried on lay out every operation on paper? That always helps when…
.. it sounds like a Euler rotation order issue. I'm not sure on the kismet side of things, I'm more unreal scripty, but if z is working, and x isn't, and based on the layout of that kismet node, I'd guess the rotation order is x-y-z, when what you're going to want is z-y-x or at least z first. My suggestion for the nodes…