AutoEquip is still broken. It may get the Stat weights right, but I don't believe it takes into account the TYPES of armor, such as cloth, leather, mail, and plate. So, if a cloth piece is considered an upgrade from what you have on, be it a type of armor that's lower classed, then it will use the lower classed item because the weights are better, but not necessarily the type of armor.
So, basically, if a cloth piece has 10 stam/str on it, and your current piece has 9 stam/str and is plate, it's going to wear the cloth piece. For some reason it's not taking armor type into account. I don't know when it's going to be fixed.