I summoned a citizen NPC with an AR gun, and then later a vortigaunt NPC to help me out with those darn insects. But it seems the vortigaunt had an AR rifle going through his stomach which was funny. Would this be a bug or glitch in the engine?
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Sounds like you accidentally spawned a vortigaunt armed with an AR rifle. No animations exist of the vorts holding weapons, therefore the is no way for the game to render the scene properly. Instead it just puts the two objects in the same physical space, which results in the scene you describe.
npc_create_equipment still retains the weapon code to all humanoid npcs.
you have to type npc_create_equipment none or any other non-existant weapon to tell the game to not give weapons anymore
Vortigaunts have been updated since HL2. They can hold weapons now.