I just don't get why they would:

1) put in the part where a Steel Watcher tells Karlach, to her face, in plain English, that her engine is broken because it's a prototype version of their engine;
2) let the player go to the Steel Watch Foundry and kill all the Banites and Watchers in there and free the Gondians; and then
3) not let you fix her engine.

Why even put that stuff in? Especially because #1 actually doesn't make sense, so I don't know why you would do it except to set up the outcome where you solve a seemingly insoluble problem. Here's what I mean: you have Gortash sending Karlach to Avernus, where Zariel gets to try out her brand-new prototype engine in Karlach's chest, but the thing it's a prototype for isn't going to ever be in Avernus, it's going to be in Baldur's Gate. So who made what for whom, and what did each of them get out of the deal? Did Gortash build the prototype and give it to Zariel in the deal? If so, what's he getting in exchange for both a powerful new weapon and his bodyguard? Did Zariel build the prototype? If so, why is she trading away a powerful new weapon for a single Tiefling (and not even her eternal soul, just a warm body for the Blood War)? And why did she never improve upon the design herself? Nothing in Karlach's dialogue implies that her engine is considered an early model in Avernus--if anything, the implication is that it's the standard and up-to-date model by Avernal standards, since early on she suggests that she could go to any mechanic in the hells and get a tune-up.

The whole thing makes no sense! ...except that it works as a way of setting up a good ending for Karlach. You really wouldn't think any responsible professional writer of fiction would include a plot element so knotty and nonsensical which adds nothing to the plot (there are any number of things Gortash could have traded Karlach in exchange for), acts as a big honking red herring pointing toward a specific desirable outcome so everyone will notice it and think about it, occurs in an unmissable dialogue cinematic so long as Karlach is in your party, and is never paid off. You are literally told, in explicit terms, that a version of Karlach's engine which works outside of Avernus exists, that the Gondians made it, and that the factory where it was made is right here in town. And then you can go to that factory. And you can liberate the Gondians.

The only possible reason I can think of to do that would be to make me, specifically, go insane. In which case, well done, no notes, I'm losing my mind.