Ah now that all that is settled in the usual internet forum way, we can all get back to listening to somewhate cheesy dialogue and pressing one or two buttons to pick stuff up!
Actually this game is a steal at six bucks; I'm always amazed at people that complain about the price of things. "Whut? I can find this game for 2 bucks if I look through 10 bargain bins within a 50 mile radius of the place I Live!" You know what I mean. I think whoever thought up the concept of GOG needs to be given a twinkie or something.

Just want to mention that I was having the exact same problem, thought it was bugged or I was retarded (which I very well may be for not reading a manual). Thanks for the "two-button" explanation all, and thanks for asking the question in the first place deejrandom.

So what do you do when you try this, and nothing happens?
I've just punched the first bug to death, and I can't pick up the meat. Action + going forward or sideways does nothing.

You need to go out of combat mode (Space by default) in order to interact with items. Your combat state will become a lot more obvious once you have a weapon equipped. :)