Strength 65, Pick in hand, Axe and Shovel on back, Knife on hip: Go to pick up a large log and get message "You can't carry the additional weight". (So far ok)

Same Character, Place Pick, Shovel, Axe, and Knife into backpack, and my encumbrance bar does down, now I can pick up same large log. (Seems odd, but might be ok)

While log is on my back, can place Pick in hand, Shovel and Axe back onto back, and Knife on hip. Green line for encumbrance runs outside the bar, i.e. over encumbered. Can move, very slowly but still moving. (This doesn't seem right to me)