According to Escapist Magazine, ”A curious player started poking around the game’s code, and discovered that the Steam version of the game is actually a developer build. There seems to be some dispute over whether this is a development build of the Xbox 360 version released by accident, or a master development build which all the other versions sprung from. Nevertheless, the consensus seems to be that someone has released the wrong version to the public, and that is what is causing all the problems.”
This would imply the retail release of Dead Island for the PC works fine.
Let us know if you’ve encountered the strange bugs in the Steam edition of Dead Island.