How is it possible to have to have sun and no shadow?
To answer this question, it is important to keep in mind the setting at the point in the story in which no shadows appear. At this stage, Estraven and Ai are on the ice on their return to Karhide. The lack of shadows is largely a result of the environment combined with the particular weather at this stage of their journey:
"Towards the middle of Nimmer, after much wind and bitter cold, we came into quiet weather for many days. . . . At first the overcast was thin, so that the air was vaguely radiant with an even, sourceless sunlight reflected from both clouds and snow, from above and below. . . . There was dull light all around, everywhere." (Le Guin 260)
Note particularly the overcast in the air, and the snow on the ground. Now to clarify, consider a few factors. To have a shadow, there must be a distinct source of light. If the sun, say, is in front of you, then you will cast a shadow on the ground behind you, because your body is blocking the light of the sun in that direction. Imagine though, if there were a second light source behind you as well, then that patch of shadow would be illuminated as well and the shadow would disappear.
Recall now the overcast in the air, and the snow on the ground highlighted previously. First, lets think about the overcast. In the description, the air is overcast in a way that obscures the sun; the sunlight is "sourceless." While the distinct circle of the sun is obscured, its light still penetrates and is "reflected from both clouds and snow." In this manner, the moisture in the air and the snow on the ground reflect the sunlight. Rather than illumination from a single strong light source (the sun), it is as though the world at this point is lit up by innumerable light sources surrounding the characters simply because the sun's light is reflected evenly off everything in the environment around them.
There are two additional points that may also be worth keeping in mind here. In terms of the conflict in the story at this point, of the characters against the environment, the lack of shadows plays an important role towards making Estraven and Ai feel disoriented and thus inhibiting their progress. You may wonder: Why would a lack of shadows make it so hard to find your way? Consider how shadows, or gradations of light on surfaces are what allow us to see objects as three-dimensional. If you have a red box, the three faces that you can see at one time as an observer will have slightly different shades depending on their direction in relation to a light source. If one side is directly, or nearly directly facing a light source, its color will be bright and vibrant. The sides not facing the light source will be darker (and will cast shadows) allowing you to distinguish the separate sides and consequently, that the box has three dimensions. In a situation such as that faced by Estraven and Ai, the light is dispersed so evenly that their eyes cannot perceive the contours of the terrain they are crossing simply because there are not light and dark spots--shadows to contrast the white--to indicate hills, crags, and so on.
Regarding their disorientation, please also recall that there was "No sun, no sky, no horzon, no world." As mentioned, the light of the sun is diffused at this point evenly amongst the white overcast sky and the white snow-covered ground: "A whitish-gray void, in which we appeared to hang." With no division of color, or of light and shadow, the characters' eyes cannot distinguish where the sky and land meet; they cannot see the horizon. When traveling, whether walking or driving or flying in a plane, sight, or at least a sense of the horizon, is a factor we largely take for granted which helps us stay oriented. Ai has trouble keeping his balance because, as he explains, "my inner ears were used to confirmation from my eyes as to how I stood." Without this "confirmation," he feels continually unsteady.
This principle reminds me of some theories for motion sickness. In a car on a winding road, an airplane in turbulance, or a boat on choppy waters, many people will feel sick because their inner ears (largely responsible for a person's equilibrium) disagree, so to speak, with their eyes. It is often recommended to those feeling motion sickness to either close their eyes, or focus on the horizon, essentially finding a visual point of stability. This visual point of stability is denied to Ai and Estraven in the absence of the horizon thus making this portion of their trek slow and difficult despite the relative easing of the weather and route.
Le Guin, Ursula K. The Left Hand of Darkness. New York: Ace, 2000.