It occurs for every NPC, PC, and monster in the game. Any model that you can target becomes untargetable. Although I have played around and something in the audio settings seems to have limited this. I had changed Audio Distance setting to "Character" before. It seems that the problem began to happen at that point. After changing Audio Distance back to "Screen" the problem seemed to alleviate itself, although it still happens occasionally. I kinda want to test it again and see if this setting really is the issue, so I can possibly submit it as a bug.