Think I figured out the NPC Wielding issue
 

Ok, i did some manual dorking around and if you summon a mob, then give it an item(making sure its already not weilding something) it WILL show on the npc.

So my theory is that the code that forces spawns is doing one of two things
-Calculating a spawn with items on it, instead of creating population, then adding loot tables
-When adding the lootdrops its setting the NPC or the item as do-not-show-wield-texture. I don't know how to force it, but can see on the npc_types table that it will allow/disallow rending items. Perhaps the code isn't taking this into account?