There is a looting bug induced by changes to DirectX9.0c (the game didn't have this problem when originally released). The third official patch fixes it, or, better, the last Circle of Eight patch (forget the name, but it's not Moebius, but later) fixes it along with unlocking a number of other things.
If enough time passes, the bodies disappear leaving the loot on the ground, but that is not the way the game works when running properly -- you're able to directly loot the bodies and a lotting menu appears when you click on a blue-highlighted body.