Manually unpacked normal mapping to fix issue with refraction being offset rather than distorted.

scene/resources/material.cpp

@@ -1032,7 +1032,10 @@ void BaseMaterial3D::_update_shader() {
 
 	if (features[FEATURE_REFRACTION]) {
 		if (features[FEATURE_NORMAL_MAPPING]) {
-			code += "\tvec3 ref_normal = normalize( mix(NORMAL,TANGENT * NORMAL_MAP.x + BINORMAL * NORMAL_MAP.y + NORMAL * NORMAL_MAP.z,NORMAL_MAP_DEPTH) );\n";
+			code += "\tvec3 unpacked_normal = NORMAL_MAP;\n";
+			code += "\tunpacked_normal.xy = unpacked_normal.xy * 2.0 - 1.0;\n";
+			code += "\tunpacked_normal.z = sqrt(max(0.0, 1.0 - dot(unpacked_normal.xy, unpacked_normal.xy)));\n";
+			code += "\tvec3 ref_normal = normalize( mix(NORMAL,TANGENT * unpacked_normal.x + BINORMAL * unpacked_normal.y + NORMAL * unpacked_normal.z,NORMAL_MAP_DEPTH) );\n";
 		} else {
 			code += "\tvec3 ref_normal = NORMAL;\n";
 		}