Backpack info
There are several places to get working backpack mods.
These work for both LOA and original. Use the appropriate dsres file for the game.
http://www.dsedit.net/zhixaloms%20inventory%203.2.html
Some useful backpack mod information.
There is a limit of 255 items in Dungeon Siege Inventory. This is not the same as "spaces". If an item takes up 2-4-6 or 8 spaces, it is still counted as 1. This is probably why it goes un-noticed in a lot of cases. If you are a magic user, especially a Combat/Nature magic user, and you try to carry a lot of full spell books (count as 13 when full), you will definitely have the problem.
So the way it works out is; You can carry 18 full spell books (18*13=234), your personally equipped items (12 w/o spell book slot, an empty spell book counts as 1 item 234+12=246) and 9 additional inventory items. (246+9=255)
That is it! Anything else you WILL start losing random items, spells from books, and even complete books! Real pain if you have something particularly valuable and the game decides to take "that" item. If you don't have a separate backup of your save character file, it is GONE! The dsparty.bak is updated at the same time the dsparty file is so you won't be able to use that file to recover items. Besides, if you already have more than the alloted 255 you will lose random items again anyway.
To add further insult to injury the game will allow you to pick up anything you want while in progress. This "feature" will only rear it's ugly head after you exit!
For the most part you will be safe but, if you start carrying single space items (spells, rings, amulets, potions) and several full spell books, you will be a "victim" if the Dungeon Siege Pickpocket!
I can't say that I have ever experienced the "Uninstall and Install" Dungeon Siege to activate mods. You do have to exit the game, rename the ones you don't want to use to something like "off" (i.e. backpack.dsres to backpack.off and, conversely backpack.off to backpack.dsres to activate) then restart the game. I don't think you will have to do more than that. By exit the game I mean shut the game down completely. You can't just go back to the startup screen. It will not allow you to change any files from there.
Hope this helps