You can download the newest version (0.40.4). Go to the inn and interact with the painting on the picture. Put in the following code and you will get the church amulet and thus finish the quest. This should fix most problems.
As for the 1HP cheese, this is something I was thinking about a lot in the past and I decided to leave it as it is for now. If I make the penalties for dying too high, then players will just save before each battle and reload if they die and lose too much wellness. I was also thinking of disabling saving in dungeons and caves to make them harder, but that comes with a lot of issues too.
I have an idea for an injury system. If you, or an NPC die, you lose let's say 25% of all your stats. If you die four times, it is game over. NPCs who die four times will be removed from your party. Skipping the week in any way will reset your stats back to normal. This system should make repeated dying not worth it, but will not affect your character long term like wellness loss does.