this issue has been answered in the technical problem/issues. it is confirmed that the no-cd hack causes the problem as after the council 'kills' the character, a CG movie will play straight from the cd & once that's done, the character will be in a new area.
i know it. i used a no-cd hack (hate the sound of cd spinning like crazy in the drive once every 10 min or so) & the problem happened. had 2 re-install the game & re-patched with v1.33 & then play with cd to get past the problem.
after that, it's up to u if u still want to try your no-cd hack. i'm not using it anymore. the thought of restarting scares the hell out of me.
whatever it is, thank larian 4 the great support. saved me a lot of times.