I dug up some screenshots from back when I could play Dungeon Siege on the previous computer. Apologies for lack of thumbnails. Pictures are png so are porkier downloads for those with slower connection speeds or with download limits.
My recollection is that it wasn't a graphics problem, but a mesh one. If a vertex lost its skeleton weighting, it would collapse to a null point, dragging all the triangles it participated in with it. Skyrim can do the same when the _0 and _1 meshes for an armour conflict, and the interpolation for a vertex fails.