I installed microsoft .net framework 1.1 in order to get a character builder to run, and it caused objects in the game to teleport instead of showing movement animations. I ran windows update and it offered service pack 1 for .net framework 1.1. I installed this, rebooted, problem solved.
I advise anybody having this problem to run windows update and see if you get the same thing; I'm running windows xp with service pack 2.
Solution to warping mobs
Wabbajak