Two Worlds Vault notes a new v1.2 patch for Two Worlds II. Head over for the file (24Mb) and the full patch notes but TWV says:
The update contains most pressing bugfixes, improves alchemy, spells and interface, and fixes various graphical issues. In addition, multiplayer balancing is improved as well as convenience tweaks (e.g. rarer merchant's VOs) have been introduced.
Note that this should be applied on top of v1.1.
More information.