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Thanks HaatShtuph and Limecat for your comments. I also found the cause of the problem yesterday for the graphical glitch but you've beat me to it. Arm_loose is really the culprit. What I've found is that the glitch happens always when you drag the body (by holding down mouse button) during the arm_loose animation. I didn't know about tap_hands, but it makes sense too.

Anyway, I'm working on other major improvements for the update1_8, I should have it ready in a day or two. Until then, I suggest editing and simply removing all the arm_loose from the txt file.