When you reach 100% encumbrance you go slow (that is normal) but if you unsheath and sheath a sword from your hotbar (press for example your sword in 1) you can move and run like you have no encumbrance, if you stop, the encumbrance slow effect reactivate. It works only when you hit 100% if you have more than 100% it doesnt work.
Please provide a step-by-step process of how the bug can be reproduced. The more details you provide us with the easier it will be for us to find and fix the bug:
Reach 100% inventory encumbrance
Unsheath and sheath a sword (well, it works with any weapon in your hotbar)
Now you can move and run as you have a light inventory
I also saw that the other day; I was less diligent that you and just thought “huh, strange” when I couldn’t reproduce it later with a heavier load. Didn’t pick up on it just occurring at 100%, good catch. Captured the below video to demonstrate just now.