Loot all seems to be bugged, at least with no trade items. When I click it then it asks me if i want to loot all, i click yes, then it asks if im sure I want to loot the no drop item, I click yes. After that, it loots that 1 item and the dialogue box pops up about the 2nd item (to confirm the loot), but it doesn't give you time to do anything. Your character just gets off the corpse.
Summary: Loot all currently loots 1 item, and then makes your character get off the corpse. It doesn't loot all items.