"I got the game launching correctly by deleting the files in the run/dynamic folder and deleting the Inventory 1 save game which was the one I created to get the Dragon BreastPlate"
It sounds like something went wrong with the 'inventory 1' save. Perhaps overwriting/deleting the wrong file caused Divinity not to shut down properly, or maybe a shutdown error was what caused the problem with the save and dynamics folders.
"ohhhh, I am not sure if this would be causing the problem but I had both Teleporter cubes in my inventory when I did the Recover lost item thingie."
You are backing up and restoring the original inventory files, so it does not matter where the teleporter stones are. I'd be tempted to just write it off as a glitch, make another copy of the original save game folder and try again.
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