The x,y,z position of a character is always known. The arrow points at the top of the character model. While there is no model (while it's still loading), it's just drawn at the default offset, which is (0,0,0) from the target. However, targeting already works even without the model. So it definitely is possible to have something targeted without having the model data. So if they need to make the character disappear while loading new equipment graphics (which is understandable), they could still keep the target, as those two are different things.