Many evolves have happened. Most of the time, A-OK. Goes to your cursor, tap the auto-equip icon in your inventory to place the item back in.
I've seen the message below twice ever the moment I click the auto equip area.

the first time.. on my rogue, I all out lost a HoH boots. Poof. Deleted. Gone. No item ever returned.
Second time, on my shaman, my greaves had no graphic after auto equipping. I picked it up, pressed auto equip, and above message happened!!!! Empty slot!!! But.. it was OK! My item returned when I zoned. Pheew. Rogue, never saw the item again.
I'm using MQ2, and this is live.
I doubt I'm giving enough information to provide any real diagnostics, but at least felt to share this link.
To make me rest better at night.. :X