Read the posts in this thread:
http://www.opserver.de/ubb7/ubbthreads.php?ubb=showflat&Number=301933

Blackchuck had a similar problem. Here's how you fix it without using the physics half of the engine. Blackchuck was kind enough to write a Lite-C version of my fix as well, so anyone else with the same problem needs to see this post.