So I went back to beregost and knocked Spec out with a punch before Ken could hit him. He wakes up and yells "they are trying to kill me" and of course he turns red and we kill him. No repuation loss either for me doing it that way. Solved the problem but I wanted to report it here.
I don't know what caused it but my install order due to the new BG1 NPC has me installing BGT1.03 first after the version 2 fixpack if that has anything to do with it. Log is attached.