Of course. On the 360 the game was capped at 30fps by default, so the problem wasn't evident. The fps cap I beleive could be removed, but the frame rate wouldnt jump so high for the physics cap to be noticeable.
This video demonstrates the problem, although not quite as clearly as when our in game as this would be a circa 25fps video, but the problem is there. Note the smooth surrounding but jerky ragdoll.
Also here is the original thread on the 2K (bioshock dev) forums, dating back to 2007, with posts sporadically from the past three ears. Obviously all avenues of vsync and config tweaks were explored, but 2k never responded to or patched the issue.
Shortly after the first patch came out, people were baffled as to why it wasn't fixed. The engine remains hard coded to the 30 fps physics cap, which makes little or no sense considering the engine is perfectly capable of standard physics implementation, as shown with the many other unreal engine based games.