This study explores the influence of Learning Management System (LMS) course site design on student failure and withdrawal rates (DFW) in undergraduate courses in a residential hybrid educational context. We used multiple linear regression analysis to explore the interactions between course-level DFW, enrollment, student satisfaction, and counts of instructor-embedded content in LMS course sites in 925 course sections in one semester at a public research university in the southern United States. Findings suggest that optimal LMS course site design supports lower DFW rates. The findings are contextualized within the Community of Inquiry (CoI) Framework, and a case is made that certain types of instructor-embedded content in LMS course sites can serve as a measurable proxy for teaching presence. This study contributes to the discourse on the impact of digital learning environment design on student outcomes and provides actionable insights for educators aiming to design student-centered digital learning spaces.