A model being visible or not has absolutely nothing to do with the game knowing where and how large an object is. The game will always have that information available, whether the target is drawn or not.
It's more likely that the game's lockon function simply terminates whenever the target or player is rendered invisible, as a way to avoid errors before they happen. It is a lot simpler from a programming standpoint to make overbearing, catch-all rules than to add complex, individual functionality (lockon loss during deaths but not during blinks, etc), and the latter is much more likely to break or glitch.
Assuming that the software engineers who wrote the initial code are still working on the FFXI team, it would be an hour long fix at best. Given the fact that they obviously don't, it may take anywhere from hours to weeks to sort through the spaghetti code, depending on how badly it was commented, formatted, and designed. It's still worth the time to ask, though.

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