Step 1: Turn OFF Steam VR. Do NOT launch MSFS with Steam VR enabled.

Step 2. Launch MSFS from Steam on your monitor like you would if you weren't playing VR.

Step 3. Set up your flight.





Step 4. Load into the cockpit.






Step 5. Hit the button you assigned within MSFS to enter VR mode. This will enable Steam VR without the idiotic theater mode that starts up if you launch it with Steam VR enabled.







That's it. That's all you have to do. Why the hell they chose to do it this way I have no idea. It's the only game that does this that I have used.

Credit to Tosei for pointing this out in the MSFS discussion forum.