Wyll seems to be a spoiled son of someone rich with delusions of grandeur and serious daddy issues. He wants desperately to be a big hero everyone talks about and tells tales of but underneath, he isn't nearly as good at it as he pretends. I don't think he's really lost anything power-wise, he just likes to talk himself up and present himself as more than he is. He likes to brag and tell tales in the hope it will burnish his reputation, even if it is all BS. He signed on to the pact in a time of fear and genuine weakness and has been manipulated ever since by a devil. A couple of his supposed exploits might even be close to true if Mizora was feeling generous with her grants of power to really hook/'addict' him early on to the pact. 'The first one is free' sort of thing. I don't really get the feeling he has been doing the hero thing very long as Spike still has his eye (ew) and both he and the other goblin in the village (I forget his name) seem to remember him quite well. Which is kind of all to say that I don't find his low level when you meet him all that odd.
We're going to have the same problem again once Karlach becomes recruitable. A supposed /legendary/ fighter from hell, too good to /ever/ let go of. Unlike Wyll, who is a mere minion to some Devil... Karlach is one's personal champion.
I'm assuming that by the time we meet Karlach again for recruitment, we, and thus she, will be of high enough level that she will be quite capable in combat. So the comparison to Wyll when we recruit him will be quite different. Also, she is now without Zariel's 'mojo' that was helping make her such a formidable warrior. This is why the Tyr gang was able to rout and wound her. She's now 'mortal' so to speak and not what she used to be. She'll tell you as much if you ask.
