Creatures drop the items as treasure when they are killed

From NWNWiki

In the inventory section of each creature there is a box labeled "Dropable" and a box labeled "Pickpocketable". Normally these are greyed out until you select an item that is either equipped or in the inventory box.

• For each item you want the NPC to drop, select that item and check "Dropable".
• Select "Pickpocketable" if you also want to make it so that PC can pickpocket the item.

• This must be done for each item you wish to drop.
• If this is to be done on a Creature that is spawned on a regular basis, like a creature respawn system, then make sure you mark these things as dropable in your custom creature palette.
  • If you mark the items dropable just on the creature that is on the map, then the ResRef that is respawned won't be marked.

[edit] Known issue

Make sure you include a spawn point for each encounter trigger. For some reason, without a spawn point, the creatures will spawn in with their items marked as non-dropable, even if you have set them to "Dropable".

[edit] Notes

On a side note; please don't make armor pickpocketable. Although it may be possible to undo the clasps of a suit of armor unnoticed, I think the NPC would know that he was stripped and the guy running away with a whole suite is the one who stole it.