I have this same graphic problem. In my case, I have a sash that places itself into the arrow slot and a shield that puts itself into the leggings slot. I have tried replacing both with new different items but the new ones go right into the wrong spot too. I have tried all of the suggestions mentioned in this thread with the exception of starting completely over.
My system is Vista64 and I am using the version from Gamer's Gate. I had installed the latest patch after reading this thread but it didnt help.
Very dissapointing problem as I was just getting going in the game and having a good time.
