As I see it, there's two separate sources of discontentment with how Karlach's story is right now-
1) She's a nice, lovable, fun character who gets utterly screwed over by the story, and there's nothing at all you can do about it. That's obviously going to be hugely frustrating to a lot of people, myself included. I know a lot of people will say that not every story has to have a happy ending, and I'll grant you that's true. But, to offer a counterpoint- not every story *has* to end tragically, either. BG3 has loads of tragedy already. It's also okay for stories to end in ways that aren't horribly depressing, sometimes. I'll be honest and admit this is the primary thing that bugs me, and it's made even worse by:
2)The lack of effort characters in the story put into the problem. This would be frustrating on its own, but combined with #1 it's deeply unsatisfying. To contrast, I literally invaded Hell to help Lae'Zel out as part of her quest in my last game, and you can go to extreme efforts to help people like Mayrina you barely know. But Karlach? once you give the second piece of infernal iron to Dammon in early act 2, that's it. That's the last time you make any active effort to do anything about the problem. Everyone just gives up -which is the one part of Karlach's story that feels really out of character for her, to me. This woman survived 10 years of slavery in Hell and claws her way back to freedom, then just gives up right after getting free? It doesn't feel like we tried our best and failed. it feels like we failed because we weren't allowed to ever try, and that's incredibly frustrating.