Game Mechanics: AC bug/Equipped armor not working??

[Intricus]

I am level 29 with an Armor Class of 585 (over 600) with shield equipped, yet mobs that are level 23 and 24 still hit me for maximum damage for a mob of that level, almost every other time they land a hit on me. I have tried stripping myself completely of all my gear, and hardly notice any difference in the damage I mitigate at all when I'm fully geared, as opposed to being naked.

Is this normal? Or is my AC or armor itself bugged?