Thank you all for the suggestions. I have tried the dropping and picking up. Didn't resolve
Shadowheart is at 32.3/200
She is carrying the following inventory items
Mysterious Aretacft
Scroll of Revifify X2
Potion of Greater Healing
scrolls: Aid x2, False Life x4, Prayer of healing, Speak Dead x4, Detect Thoughts x2, Cure Wounds, PfG/E, Blindness, Inflict Wounds
No way is that even close to encumbered.

This is obviously a bug, that should be addressed. I believe it will be addressed and fixed, but I want to make sure to call it out, as it has ramifications including combat tactics and QoL.

Thank you all for engaging with this thread. I'm really enjoying the EA version so far and super-excited to see the release. I love that Larian listens and is implementing a lot of things we have recommended and asked for. Larian is a solid company. Quality gaming.