Talking to Salt-on-Wounds, i get 2 options. I can either tell him that I'll ask Joshua for mercy on the White Legs, or tell him to defend himself and thus initiate combat with him.

When I tell him that I'll talk to Joshua, my character is frozen in place and can't move. The game HASN'T frozen, or crashed. My character is simply unable to do anything else. As if there was going to be cut-scene or something similar. Maybe Joshua is supposed to walk out, I don't know. Nothing happens.

If I initiate combat, I am unable to his Salt-on-Wounds. I can kill his men. Not him. I'm unarmed and using the "mantis gauntlet", But my fists seem to move through him, without causing any damage.

Reducing difficulty from Very Hard to Very Easy, did not help. Using the console "kill" command kills his men (and everything else in the game) but doesn't kill Salt-on-Wounds.

I don't know if this is a bug with Honest Hearts, or I simply missed something in the previous story what would give me a clue what to do.

Does anyone know?
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Try to verify your game cache. It works fine here killing him and also Joshua is doing his thing.