I went down into the upper part of her lair, and attacked Auntie Ethel there. Killed her before she got to act, and then looted her. I have mulitple issues with happened next: The game didn't consider her dead, but I got the xp. The slaves of the masks, where still enslaved to Ethel. The cutscene with Ethel and Mairina still plays out at the bottom of her lair. Mairina refuses to speak, and warns about Ethel, despite Ethel being dead. The cage is still around the corpse of Mairina's husband, and I got the debuff of Ethel's disapproval. Many indicators of Ethel being alive, despite having killed the hag.
