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I had to restart because I was in an area where I couldn't avoid a death and neither of my save games put me far enough back to avoid the area (I know, silly me).

Anyway, on second playthrough, some of the items I found late in the game the first time were still in my inventory at the beginning of the second playthrough. And vital inventory items that I used in the first playthrough were no longer in their correct place during the second playthough. Specifically, I had to retrieve a book that is necessary to proceeding in the game and it was not obtainable in the second playthorugh. The "look" option sees it on the shelf, but when attempting to pick it up, the game says I already have, but it doesn't appear in iinventory.
Which one of the GK-games are you talking about?
Patryn: Which one of the GK-games are you talking about?
Sorry - this forum came up under my GK1 game on my account. Didn't realize forum was for whole series.

In any case, it's GK1 and just to add new info, I started a new game and inventory is working properly. So it seems that the error only occurs when RESTARTING after a death.
Oh! Okay!

Interesting. I never encountered this error. But I'm glad that a complete restart solved the problem.
The original game had a glitch where you could start the game with the item you were using when you started the new game. I was actually able to get into the hounfor on Day 1, but doing so makes the game unbeatable.

It all depends on how you started the new game. If you want to start a new game without problems, restart the game and start from the main menu.