I've had this one happen twice now, with a multiplayer and single player run.
Upon killing all the rats at the base of the Shar statue in the Gauntlet of Shar, Lyrthindor appears and the dialogue goes along as normal, but when the fight starts he will blink in and out of existence which makes him hard to hit and impossible to target with up-casted spells as the menu option vanishes as he does his little blinky thing, also he will skip his turns. AoE damage like moonbeam, wall of fire, hunger of hadar, etc will damage him and the fight turns into a waiting game for him to die to those effects. You can see the issue in this clip:
https://gyazo.com/5f3a1dd248a96ee6c77fbd62e3650e90He tries to do something, but it is canceled out each time and you can see where trying to use an up-casted spell is impossible.