AlphaN Well. Didn't expect to find something that would make me want to go back to my work PC.
The Party Switching bug is dead, long live the PartySwitch bug!
Sierra's leveraging a 3rd party (ha.) RPG Maker script to create a separate temporary Simon in a separate temporary party designated as party index number 1. This is why the Simon in the incubus prison has completely different stats, skills, XP equips and etc. compared to normal real world Simon, who is (for the purposes of the game engine) an entirely different character.
So what's supposed happen when you switch to guiding Esthera at the end of the incubus prison section, is that you switch back to party index number 0, which is the "default party". SOMEHOW, for you this isn't the actual normal party... It's party you have at the start of the game. The one with Kai and no inventory.
This is probably going to entail me doing a line by line analysis of the third party code module. yay...
Do you remember if you were faffing around in the Withered Mountain map for any reason during any of the Ch4 or Ch5 free roam sections?
In a completely unrelated story I'm declaring that I've waited long enough for @thisgamething to reappear. I'm giving Sierra the current build of the edited Ordeal and IK Castle. I don't think I can cope with having two totally unrelated party switching bugs on my my desk at the same time.