How do I setup melee weapon??

What are you looking for? The animator has to be setup separately. The animator transitions are controlled by the different IDs like Slot0ItemID, etc. Here's a video on the animator controller structure:
 
I've set up a melee with a single attack, it only attacks once then everything locks up... The use ability doesn't stop. The animation has OnAnimatorItemUseComplete event.
 
So the problem was use rate too fast so completed event never fired before another use... Now the problem is collisions not working most of the time. Maybe 1/10 times it works...
 
It seems to happen much more often if animation speed is too fast, almost like it's missing a collision trigger or something hm
 
It's probably related to custom ragdoll, once I switched to default Unity ragdoll it works fine
 
I'm not sure how that would relate to your ragdoll unless the collision layers are set to intersect with your ragdoll layers? Normally in this case I recommend increasing the size of your collider. You could also use a static collider that doesn't move with the weapon so it'll always hit in that area.
 
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