...what happens is that sometimes a NPC (or monster) is spawned before the terrain has fully manifested. The NPC falls through the world until it reaches the bounding box. At that event the engine respawns the NPC at at the top of the world above its original position.The problem here is that the character falls, picking up speed, and might be traveling too fast for the engine to recognize when they should be stopped by the ground -- so the process repeats. If this goes on enough times then the NPC is respawned at co-ordinates (0,0,0). This point is usually in the world somewhere, but not always. NPCs can appear at odd places sometimes -- or not at all.
So that's why leaving and re-entering can straighten this out.
