Mech games like Armored Core feature replacing body parts, but don't necessarily allow scavenging from enemies. Usually a mechanic like that is unbalancing because the player can quickly amass vast wealth.
For example, if Armor A costs 10, and Armor B costs 75, and Armor C costs 400. The player might only be able to afford Armor A at first but acquires Armor B as soon as he fights an enemy so equipped. And after selling the loot from just a few more Armor B enemies he can afford Armor C.
One way around this is to say the equipment is too degraded after the combat, and looting it isn't worthwhile. I think most games would use this justification for not even showing the loot. It's also possible the loot is almost completely destroyed, but you could loot it and return to get it repaired ... but the total wealth gained in all that trouble is relatively low because of the repair cost and the opportunity cost in wasting time hauling low-value items back to town vs. adventuring and getting better treasure.
Another way is breaking down the captured loot for ingredients, for use in creating the next armor. There's a monster hunting multiplayer game called Dauntless that's popular right now that does this.
Yet another way is just making it so NPC buyers pay almost nothing for the captured loot, so its value is strictly in upgrading. In order to wear a thing, you have to kill at least one enemy that was wearing the thing. Ways to slow this progression down include armor sizes (your Halfling can't wear the captured platemail because it was made for the Orc you looted it from), randomized capability (this platemail is not so good, the next platemail is a little better, after finding 300 more platemail you pick up the best variant).
Finally you could go with the 1974 D&D method, where a starting character can easily afford platemail if he likes. But each armor has tradeoffs, with heavier armor making you move slower because of its bulk, it weighs more so you must carry less of other equipment and treasure, and it's louder. When Leather costs 15, Chain costs 30, Plate costs 50 you can have the players encounter a bunch of platemail-wearing enemies without the treasure value allowing further player-equipment upgrading to the first tier of magic armor, which even if available for sale would cost several thousands.