I have the same problem as Robert. Same installation as him, BG, ToSC, 1.3.5512 Bioware patch, Baldurdash fixpack, UB. Oh, I also have the Baldurdash ToSC game text update.
I grab Kagain in Beregost, and the quest to look for Entar's son goes into my journal. I go north to the Crossroads, AR 2800. Kagain says nothing upon entering the area. The party walks to the larger caravan near the center of the map, no named bandits to be seen. Kagain walks on top of the dead body, and gives his parting speech:
"You've got hardy hides, folk. If you ever need any more dwarven muscle around, you've got it."
Kagain leaves the group. Then a second or 2 later, without my talking to him, he walks up to the group and gives his rejoining speech:
"It's about time you got back! Some nerve yous barrelheads have, leaving me to stand here for so long. It's a wonder I suffer your company at all."
Unless I walk away from the caravan, Kagain will continually walk back to the body, leave the group, then come back to the party, and rejoin.