I made it into the lair/palace/whatever (brass key, gate SW of NT)...
I go up against some Corrupt Mages who keep summoning creatures. I
finally wipe out the Mages and I'm on the last creature, and viola!
Caleb experiences sudden death.

Ok, I load my last saved game and go for it again.

This time, I encounter a Scorpion King who keeps summoning more
scorpions. Ok but this seems like a fun challenge.
BAM, I choose "fight" and Caleb dies. But this doesn't end there - for
the remaining rounds, regardless of whether I chose "Fight" or "Run,"
the next player in line dies. Again and again, until only Poe was
left, poor poisoned poe, and finally I manage to "Run" away. Now I
have a group of 5 DEAD players (by Running, Poe died too) wandering
like zombies through the dungeon with Iqtar trailing them like a
devoted puppy. After about 2 or 3 squares of movement, the game must
have woken up and thought "hey wait a second...!" and my game reverted
to a new starting game.

Here's a screeny, it is not the greatest quality, but I was on the
train and took the pic with my phone.

http://danspage.tallerworks.com/dragon_bane_ii_sudden_death.jpg

This was taken just prior to Poe getting killed with my final round
choice.