When I tried mounted combat for the first time, I rode through the wilderness and encountered a Sabre Cat. I wear the Ebony Mail so of course when I enter combat, I get the shrouded look, and my whole character goes black. So my character went shrouded while I was on my horse (Shadowmere), and even when I get off my horse and out of combat, my armor, weapons and shield, but not my character are still shrouded.
Any Ideas on how this could be resolved?

Try unequipping and dropping everything then re-equip and see if it's back to normal.

Unfortunately that didn't help.

Sounds like reloading an earlier save or not using the armour may be all you can do.

Reloading a save does not work.
And, it's not just armor that is shrouded, it's potions and books. I don't see how though.
Even doors and other world objects are shrouded.