Is this retail myth or P server myth ?_?
Guessing retail if its in general, in which case without confirmation Id say it could be either considering how laggy looting is, however, I think it would be generated on creature kill, as then the NPC can be marked as no loot or has loot (sparkles?)
Though I have played so little that I dont know if mobs are marked as unlootable if they dont have loot. But Id assume they are, which would mean you cant loot an "empty" creature.
In this light, it is pretty certain that the loot would be generated instantly. Pretty unlikely that it would be only decieded whether the NPC has loot or not, and then the rest of the loot would be generated later.
So id say its just a myth with no actual evidence and all I can think of (unconfirmed though) speaks against it.