This has always been one of my pet peeve of Skyrim (and all Elder Scrolls games for that matter). I really wish they would improve the AI in this regard but this video, which may have been shown before is so true. I laugh every single time I watch it.

http://www.youtube.com/watch?v=lHbF9ynGZV0&NR=1&feature=fvwp

Truly an awesome video. There's another somewhat like it for Fallout 3 showing some guy getting a stealth kill with a sledgehammer, and splattering his friend with blood, and all he says is "must've been the wind"

Lol, that video has just make my day, indeed, it's your imagination that an arrow happened to stick in you head.

Yeah that's pretty much what happens. I can have a gaurd stand 5 feet in front of me and not detect me. It's pretty ridiculous, but it adds novelty to the game, like npc conversations did in Oblivion.

"The secret to sneaking is not to be seen. Empty rooms. Empty tombs! Sneak in the dark, though the blind man can see you."

Ha. No joke.

An NPC should never just go back to what they're doing after they get hit with an arrow.

Yeah even if they return they should at least look around for quite somewhile and finally sheathe their weapon and don't say it was his imagination rather why not something like 'Hmph, whoever it is they seems to have run already". Or something the likes.

I hope Bethesda is looking at Deus Ex for hints on how to do sneak, because that game has some of the best sneak gameplay I've ever played.

Yeah, it was pretty awesome. I loved the silent takedowns too although they weren't very silent to be honest, haha. I wonder how well that system would translate to TES?