One of the Sisters had a Rusty Sword equipped, I told her to drop it to the inventory without un-equipping it. After that, I could not equip any weapon with her (Popup menu did not respond when I clicked equip on her new Iron sword) until I re-added the Rusty sword back to her bag, which auto-equipped.
Hm, okay. Do me a favor--the next time you see that happen, just tap 'L' to generate a log file in Documents > My Games > Telepath Tactics > Logs, then attach the file here so I can see what's going on in the code. That'll help me fix it! ;)