The strange OX is just flat out killing Dammon before you can even get into the barn. And it won't enter turn based mode until he's dead, you can hear the attacks as you approach and then it will finally allow entry into turn based as you watch his corpse fall to the ground. I did this over and over yesterday trying to save him. He was alive when I left him, I saved after trading with him. When I return or tried to reload this save he is slaughtered too quickly.
The game is literally preventing itself from working properly to enter turn based mode before Dammon is down.
The notes would be a good backup solution. Allowing certain NPC's to be revived would also work. More health to Dammon would also work... being a smith in Hell should be more than 1st level stats...