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When you say "fully patched," do you mean the official patch only, or the official patch + baldurdash?
IIRC, there's a bug that was never properly fixed in the official patch. Basically, either the "that's party treasure" response or the "go ahead and take it Edwin" response should set the transformation in motion. However, due to a bug, the party treasure response would keep it from occuring. I think Baldurdash fixed that.
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