I don't think the NPC looting and the merchant one are the same but, but the NPC looting is fixed in dev CVS.. Should be on SF in a few hours.
But here is the patch to loottables.cpp:
	Code:
	*** loottables-orig.cpp Mon Nov  8 19:11:03 2004
--- loottables.cpp      Thu Nov 18 16:39:27 2004
***************
*** 599,604 ****
--- 599,609 ----
                                
        item->item_id = item2->ItemNumber;
        item->charges = charges;
+       item->aug1 = 0;
+       item->aug2 = 0;
+       item->aug3 = 0;
+       item->aug4 = 0;
+       item->aug5 = 0;
        if (equipit) {
                uint8 eslot = 0xFF;
                //const Item_Struct* item2 = database.GetItem(item->item_id);
 Sorry about that.. Thought I caught all ServerLootItem_Structs, but missed setting the augments to 0 on the NPC loot.