I've had this bug in the past, and I strongly believe that it's been here since vanilla FL, but since someone asked me to post this on the forum, I guess I'd better do so.
The displaced image bug is one where a second image of another player's ship is created for some unknown reason. This image stays completely still in one sector of the system you are in, but, strangely enough, can be seen from any distance (tested on distances up to 110k) although as normal not selected until a 10k range. Shooting at the ship's shields will not appear to reduce them, but the actual player ship will take damage. This damage will continue even if the ship docks and undocks, but if the player relogs, the ship will stop taking damage, although the image remains visible at all times. Also, if the image of a player who has relogged's ship is rammed, all shield is lost from the ship doing the ramming, and all hull is lost if there is no shield (tested on a 10k shield and 60k effective hull). When an image bug occurs, only one player can see it. I know that the bug occurs for Fighters, gunboats, destroyers and bombers and I believe it occurs for all ships. I'm unsure as to whether or not other players can "pass through" displaced image bug ships, although I believe that since they can't see them at all, they won't be able to touch them. If the actual ship moves between systems, the image will still stay. Selecting an image bugged ship when the real and displaced ship are next to each other creates the "selection box" around both.
I'm guessing that this sounds too strange to be true, but I have screenshots, which I will upload soon.