Drag the skull from the top of the chest into your inventory.
Reputation is how other humans perceive your character. Since imps and orcs are 'the enemy', helping / consorting with one will drop your reputation, regardless of it being the right thing to do or necessary to save the world.
In DD only the damage you do is listed on screen, not what is done to you. If Aura of Guarding and Spell Shield were both reduced, the attack must have done physical and magical damage. Check your resistances; if any are negative (a super drug gives +100 poison resistance and -100 spiritual resistance, for example) that can lead to large damages done. Death Strike can also do a lot of damage, regardless of hit points or protection (though it can be resisted).
