Everything is determined when the item is first dropped, client will however not receive any more information about it than is needed. (So for example plus, bless, echant won't show.) However when you pick the item up, server will send the item information to your client thus making you to see the plus, bless, enchant etc.
Simplified: server knows the information, you don't.
This is a mistake many make so no need to worry if you got it wrong.
And like yuko said, this doesn't belong here, request closing or moving to dicussion.