Here is a simple puzzle prototype that I designed and coded in 3 days. Big thanks to Pete Bottomley for helping out with some stuff. I'll probably art it up, but that would be a separate project, as such, the completed puzzle can go here.
Design: Basically, there are three pillars that can be moved up and down by three triggers, and the goal is to get all of the pieces matching on one level. If one of the pillars goes too high or low, then the puzzle resets. This took a lot of thinking to work out, but I am so glad that I finally have it finished!
The last bit of the video shows what happens when you move one of the pillars out of bounds.
Looks cool man. When prototype ideas (to show other people anyway) might be good to put basic materials and lighting in place. You could either use one of the provided UDK templates or even set up a blank scene (like you have done) but then add a better scaled floor material (grided or blank) then a skylight or dominant directional, lets us see whats going on in the air a lot better I think. Pillars are quite hard to see that far up!