I was just in the game, and got my Sovereign up to visit the Witch on the Small map, Single Continent.
I was asked to find her sister, when I accepted it, the sovereign paper doll figure disappeared.
It reappeared when I closed the game down and logged back in.
I'm using an Geforce 8800 GTS, with the latest drivers (6/15/2010 257.21 WHQL)