I assume you mean this one? http://www.youtube.com/watch?v=zKOhzfkCdbY
Yea, at 0.30 it does kinda look like she might be topless, but it also looks like there might be something over the nipples. --- "u ned to sta away from the cops to hav crinial ackeavmnts" - ablegator. http://www.wardb.com/ Learn it, Live it, Love it.
This makes me think of the age old art/pornography debate (in that a photo of a naked person is considered pornography, but a drawing of a naked person is considered art). How would that work in a game? If that Witch Elf actually was naked, would it have caused an issue with the T rating or since it's actually a drawing in the game (and therefore art in the game), would it have been ok?