You bring up a neat question.

I like the auto-loot method myself, although like you say, if a lot of it is garbage it could clog (or fill!) your inventory with junk so you can't pick up better loot.

The positive points about it though is if you play world of warcraft for instance, most people don't even bother looting cause it's all trash or they might say "eh... someone else will loot it and if it's valuable we'll roll on it", which if it was automatic so no one had to loot it, it would be even better.

I also like how in WOW when you loot gold it's divided evenly between the group members automatically.

the extra click of looting things just doesnt seem worth while.

Although in diablo it can be kinda fun, trying to get the good loot before the monsters rip you apart, but then also you just get a bunch of ninja looters taking all the good stuff.

Depends on the game.

I like to see the spoils of my efforts lie before me, and I enjoy both the decision of which item(s) to pick up, and the tactile sensation of selecting and acquiring it.

In other words, games that run something like, "You kill the Goblin. You got a chainmail!" are unsatisfying. I enjoy seeing creatures drop items in Diablo. The item flies up into the air, spins around, and lands with a *clunk*. I can press the TAB key (or whatever) to get a list of the nearby items that I have won. I can easily determine by the color of the items' names which are more valuable than others. I can also easily determine by the name of the items which are more valuable to me (if I value amulets over armor, for example). I can then choose which items to acquire and which to leave behind.

WoW is less fun than Diablo in this regard, because I have to look at each monster that I've defeated, individually, in order to assemble a list of the items that I've won. Only after I've clicked several monsters can I make an assessment of value and do the actual collecting.

So, my suggestion for your looting: Provide the player with a list of spoils after each encounter. Allow the player to easily identify each spoil, and give some measure of its value. Then let the player choose which items to keep and which to ignore. Then streamline this interface.

When I started thinking about this for my own project, I first believed it was just a tedious action to put the player through. That by providing lootable bodies/objects, we're just creating a pointless incentive for players to stop having fun and click things.

After some time later, I've started to change my mind. Having to stop to loot things does interrupt the action. But that probably does more good than bad in most situations. The player has been rampaging through an area, ducking for cover, blasting things, etc. With auto looting, it's just off to the next room/hallway to rampage/cover/blast again, then again, then again, until something like a cut-scene takes over. With manual click looting, it creates a change of pace and action to slow down and look around for useful items.

With manual looting, it wouldn't hurt to provide clues as to which characters are most likely to have this or that item before the player begins digging into everyone's pockets. For example, maybe foot clan soldiers only carry knives, so the player never needs to consider them. But the ninja masters are heady guys that tote around important things, so it's always a good idea to check them out. The same goes with container objects. If you randomly place very important items in every type of container, it's just going to force players to click everything, rather than use their brain and discretion.