Had a similar issue playing with a friend. That being said it seems fine if I talk to malady with my character, she does not mention that we failed (even when we get the owl). But if my friend's character does it, she says we failed.
I spoke and completed most of the quests that gives source, so could it be than my friend is not properly flagged as a result?
We validated 100% of the source giver, and got the next destination like 3 times.
