@Spitball - Sounds very similar to me, except for the results after the fight. I just don't understand why the faction rating was impacted by every one of the 20+ kills in that fight, yet on re-entering the castle everyone whether common or templar is ignoring me.
@Wereboar - Thanks, that was the answer I was looking for. Seems odd though, you would think it should trigger and remain regardless.
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