Strange. That's a pretty simple switch, so I'm not sure why it would be breaking, but I'll definitely take a look. Pardon though, a bit sick atm, so may take a bit to get back on this. Will post once again once I have a chance to look at it though. I would like to ask for clarification though: if you're DEFEATED twice, you shouldn't even have the charm anymore: Mahir takes it away after the first defeat. If you just mean you've been hyno'd in battle and moved the "dazed/clueless" etc counter up one, that MIGHT count, but not on two, if anything I don't think it should block the charm until the fourth one. I do have some logic that forces hypno in a few edge cases, and that might be one of them.
Viewing post in Bug Reports Thread - Version 1.0.x (Content Pack 3)
Apologies, I was remembering wrong. I USED to have Mahir take it away after the first loss, but I stopped doing that as using the charm unlocks another ending, and having it so highly gated was a bad idea; I wanted to give a higher chance of people ending up using it, one way or the other.
That said, I did just test it out a bit. Everything works normally on ent dist 1 after 1 defeat. Same goes for all three crowds in the final ent dist 3 rush, including the striker one. No hypno while charm is equipped. Had it on zero battle hypnos though. Would you mind tossing me a save file on catbox.moe or whichever site you prefer? Zip up the "filex.rpgsave" AND the "global.rpgsave".