Try to make a char loot some stuff and kick him from server -- see if your loot is still there. It seems to happen to me quite a bit on other incidents as well, for no explanation. You need to make sure _DEATH_ is wiping our characters because I have lost my character 3 times now trying to login to a server and failing (this last time I got kicked and went back to try to get back into ANOTHER server and was naked) crushed my keyboard with a hammer fist, smashed the keyless keyboard against my monitor and then took my mouse and threw it at my dog.