Happy to answer! I'll also make sure to review and see how we can clarify those in the next version.
-When you run out of Flesh your character dies unless you have something that negates that. When you run out of Spirit, your character goes catatonic and suffers some form of coma/heart attack/death really at the DMs discretion based on what works best for the moment. Think of it like Morale fully collapsing in a way that physically impacts you.
-Mechanically we should clarify how that works. I'll need to talk to my other devs about this, but currently it's intended that if the mutations hit is up to GM discretion.
-The Flesh and Spirit costs deducted applies with the other damage at the end of the contest. This way a character can go out with a bang.
-Conflict Resolution could also be clarified a bit more in the next release. Currently, how it works is, where Percussive Maintenance is used to make items work, Conflict Resolution is used to make concious being and living creatures work. Think if it like thrashing someone around and intimidating them physically, usually used to avoid entering a contest and risking damage.
Thank you for the questions, they're genuinely super great feedback for us!