This bug is kind of driving me nuts. The rest of the game seems to run fine, but I can't seem to loot or kill npcs. I can knock them to the ground, and sometimes I can even get the deathblow animation to start, but the npcs always get up too quickly. So, I am unable to loot them or kill them when necessary.
Any help would be greatly appreciated. I am running it on Vista 32-bit, and I'm still on Chapter 1. I don't want to go any further until I resolve this problem. Also, Bullit is attacking me every time I walk by him (he always has very little life since I almost killed him), so I'd like to just kill him and get him to stop.

Ok, I just found a bit of a workaround on the gamefaqs forum for anyone else having this same problem. When the npc is on the ground, just switch to your bow or magic and kill them that way. With the bow or magic, you don't need the deathblow to kill an enemy.
If anyone does find a way to fix the sword deathblow problem, I would love to hear it, because I still can't loot a knocked down npc without killing them with an arrow first.
Thanks.

I had not heard of this, but I am glad you found a workaround for now. I never seemed to have an issue with killing npcs with the sword, and so I am not sure what you mean by "deathblow." Unless you simply mean finally killing the npc.
Anyway, enjoy the game and as you are able kill everything for the xp; you will need it.
Have fun!

True, true. Now I recall (have not played in some time), the final move to kill the person.

As I recall you have to hold down control and attack while targetting a prone enemy.
You'll perform a killing blow and they'll die permanently, making them much easier to loot.

You should report it in Ironkeep Studios forum to make them aware of it and possibly get it fixed in next version.

Petrell, thanks for the link to the board. I posted the problem on their forums, hopefully it helps them out.