If you don't want to mess with SP2 and dx9.0c at all (dx can go pretty deep and be a real @#$%#@ to uninstall), you can instead use the following alteration of the game:
http://www.jadri.com/temple.zip
It's written by Moebius 2778 over at co8, and solves the looting problem for most people. It also changes some rules to better-conform to 3.5 (and in every case I think the original lack of conformity was not by choice, but by error, so this is a very designer-friendly mod). The only big difference is the inclusion of a level un-capper, allowing you to go up to level 20. You, however, don't need to take advantage of this, if you choose to play the way Troika wanted you to.
You must have applied the second official patch. If you have, you will have the proper temple.dll file in your ToEE directory. Replace that file with the one in the zip. Then put all the folders in the zip's "Data" folder into the "Data" folder in your ToEE directory (they will not replace anything there). Once you have done this, the game should run well, and the looting problem should be solved. It may mess up saved games you have, if you've used meta-magic feats, but this can be corrected, and you will likely not have to start over. Otherwise, everything should be fine. My own previously-saved games run just great.
***Minor Spoiler:***
Before applying this mod, I had looted Alrem with one character, and wasn't able to plant the poison on him, because even in battle, you can't loot a corpse that has nothing, so I couldn't open his inventory to put the poison there. After applying this mod, he opened up just fine, and quest completed!
Linear Mode
