NPCs arms always out / Henry floating / No animations


I am having a problem with KCD whereby generic NPCs simply stand with their arms out to their sides, all characters float rather than walk and there are no animation for opening doors or picking items up. This is Win10, 64 bit, 16gb RAM, GeForce GTX1080 with latest drivers. Games like Forza 4 run at the highest levels with no issues at all but it looks like KCD struggles for some reason.

Does anyone have any suggestions?