Not sure if this was fixed in a nightly build or not, since I don’t play those for fear of bugs galore, but wristwatches counting as covering “arms” doesn’t make much sense.
I mean, yeah, you wear it on your arm. But this makes it so that if you’re wearing something like a trenchcoat or a hoodie, or hard arm guards, you get the +2 encumberance from wearing two things on your arms, despite one of them being a watch. This means either you can’t aim for crap, or you miss out on the arm warmth, armour, and storage of a trenchcoat or whatever.
Yeah, they probably copied some arm guards and forgot to take off the covering tags. They fixed this in the nightly and it is reccommended to do this with your jsons as well.
I’m fairly certain this was fixed in 7.1, you should be able to just redownload the “stable” build to get this fixed (and yes, saves from .7 are compatible).