I usually do custom with all survival settings set to the hardest except for animal rarity. Since it gets very easy to find food in this game. However I tend to keep cannibal health and damage set to normal since I don't like them to be oppressively hard.
I prefer respawning loot off because it just feels kinda unrealistic and turning off respawning loot of encourages exploration and knowing where to find stuff. It does make building harder though so it may be less ideal for someone who favors building, but the problem for me is that it just makes actual survival and dealing with cannibals easier then I prefer.