1) I figure that no one really understands Soul Forging very well, and certainly no one has had experience with that specific event - soul forging spell complete at the moment of one person's death. I believe Zandalor ASSUMED that it reversed the usual effect. He was wrong.
2) Damian needed the Dragon Knight to get the Patriarch to reveal the Hall of Echoes, he wouldn't do it for Damian. He probably meant to intercept the Dragon Knight before he entered, but um... wasn't paying attention, I guess.
3) 50 years ago. It says it all over the place. Divine Divinity was 70 years ago, Beyond Divinity was 50-55 years ago (probably closer to 50 than 55), and the Divine was killed 50 years ago.
People definitely seem to live abnormally long lives. Seth, known as Lord Seth (a level 45 knight) in Divine Divinity is still up and about 70 years later. Old age seems to have lowered his effective level, though.
Buad was skilled enough 70 years ago to have the Assassins guild conscript him to cure one of their own, so he's at least 90, but he doesn't look it.
There are older people around, though. Simeon the philosopher had an old age thing. Zandalor was already over 600 years old at the start of Divine Divinity, and we know that the Dragon Knights live for hundreds of years because the path there goes through the Battle Tower, which Laiken occupied for hundreds of years.
Having the Dragon Cliff Castle people be kids trying to recapture the glory years of Orobas actually makes sense.