When recruits leave your party, all of their items are put into your inventory...to have the helm disappear would definitely be a game stopper.
You did get into the room in the Rattkin Tree whose only entrance is through a hole in the ceiling and got the helm out of the chest?
If so, your only option would be to go to the main Wiz 8 site and post in their tech-support forum. Here's a link:
Wizardry 8