So this was a bug before the latest patch, but I did not see the bug addressed in the patch notes so I wanted to make sure that the developers were aware of this issue. Hopefully this is the right place to leave bugs

So a buddy of mine, my wife, and I were partying up together. We each created a character, then entered the game. My buddy did not start out in our party though, and on my wife and my screen, he was marked as an Ally. We exited the game, reentered, and were all in the same party this time. My buddy and I headed almost directly to Milo's location. I started combat with Milo, but my friend stayed in free-play mode. He killed Milo without any resistance in the free-play mode, while I held him still in combat mode. We raided nearly the enter starting fort doing this. A video of this can be found here:
DOS II bug Hope this information helps
