Item loot is just a single item. If you clicked on an item that was no drop or a bag, the game counted that as your "1 item" and didn't let you loot it. IE you done messed up.
I fondly remember item looting a sweet magic staff on my 6 high elf Mage from some stupid gnome on VZ.
I did find the whole BagQuest stupid. If you're about to die you could just bag shit and they couldn't win it. As far as I'm concerned one you are engaged in PvP combat you shouldn't be able to unequip anything. Doesn't make much sense while running away from a ranger to go "shit I'll take off my robe and put on this different robe". But it's a fantasy game so meh. Guess it's classic.
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