Yeah, the looting bug was a big issue, but it's not caused by the NPC patch, just to clarify for those reading. It's an issue to do with patch two and later versions (or later service packs for) windows. In this particular instance the fault is hard to place on the developers of ToEE, as they can't anticipate changes to OS's before they happen. That said, when Atari pushed this out the door too fast, it was seriously crippled, people knew it, and Atari lost money (and killed Troika). But patched, the game is saweeet.
BTW, a better fix for the looting bug, IMO, is moebius' temple.zip fix, which is included in the various later co8 mods, or can be had separately. These and all fan fixes really require that you do not install patch 3, but stick with 2. This is because after moebius' fix, which did what 3 did and more, patch 3 was totally unnecessary. So nobody recoded any of their work for p3. Thus, if you want to run any patches (including the NPC patch, btw), and be free from worries about conflicts, I'd go with p2 and moebius.