when i go into the innn in the main town, i encounter the duke. i ask him some questions, and then i notice his name changes from orange to red during the conversation. after the conversation is done something hits him with a ranged attack and then the entire inn is aggroed to me. i tried several different times and it always happens. is this a bug or part of the story?

also is everything/one supposed to drop me in 1-2 hits. npc's are cause on average 30-50 points of damage. so much so that i have only fought 2 orcs and some crabs at the start and then everything else is too hard. is this something they are going to fix or is it supposed to be this hard?