This really seems to be a bug we never had. If this even happens if you restart. I would say you should try to clean up the game and unpack it freshly. There are some user files under: \AppData\Roaming\Godot\app_userdata\Project Merge, just delete the "Project Merge" folder.
Otherwise it is possible to play without merging, but it will be super hard as you probably got to experience already.