Dragonhunter Harsk and undefeated villains

"When a local character fails to defeat a story bane or an Aberration, Dragon, or Giant monster, you may reload it into its location instead of shuffling it "

How would the above power interact with undefeated villains and escaping? Would Harsk's power override escaping and just put the villain on top of his location? Why?

Would it matter if this happens in the last location remaining (so the villain is *technically* escaping, but for practical purposes he is just being shuffled in a pre-determined location)? Why?

I believe so - and here is why:

If the storybook, cards, or rules are ever in conflict, the storybook overrides the cards, and the cards override the rules.

It depends on "when" you reload the bane - is it during Resolve the Encounter step? Do all other steps after that apply?

Definitely the Villain would be reloaded for your second variant - the Villain would be shuffled back in to the same location even if it escaped into the same location, so the Harsk's power and rulebook instructions are in conflict => it gets reloaded instead.
For the first variant, the question is "should I reload it first and then maybe apply all the other steps, including Check if the Villain Escapes"? The "do what the card instructed you to do even if it is not in sight" instruction might or might not pertain to the rulebook. My opinion is to reload the story bane into the location.
Why? Symmetry. If the story bane was just henchman, it is reloaded. Aberration, Dragon, Giant? Reloaded. Villain? Huh, reloaded, I guess, as it should be similar, right?

It depends on "when" you reload the bane - is it during Resolve the Encounter step? Do all other steps after that apply?

I don't believe it's during the encounter, as - to my understanding- shuffling only happens after any potential After Acting is also resolved. As such, Harsk would NOT topdeck an undefeated Giant Fly ("After acting, shuffle this card into a random other location") even if was the appropriate monster type - as Harsk's power is supposed to replace the "undefeated shuffle" - and not any other for of shuffle (i.e. by the tyme you should "normally" shuffle the undefeated Giant Fly - it's already shuffled somewhere else, so you have an 'impossible instruction")

By the same token, I'm not completely sure about your (and mine - hence this thread) reasoning on Villains, as the "escape shuffle" can be perceived as REPLACING the "undefeated shuffle", as opposed to just UPGRADING the "undefeated shuffle".
The timing is the same however, imho, so definitely you do NOT reload a Villain before Check If Escape. Harsk's power is meant to REPLACE the "undefeated shuffle" - question is if it ALSO replaces Escape - or else it doesn't apply at all.

Not arguing against the Giant Fly :) That one is a pest. After Acting does not come into play in your examples. Resolve the Encounter step seems to me like a part of the encounter just after After Acting and before Avenging.

If you did not succeed at all of the checks required to defeat the bane, it is undefeated; if no local character wishes to avenge your encounter (see below), apply all effects that happen when the bane is undefeated, then shuffle the bane back into its location.

So undefeated bane (including Villains) becomes "undefeated" in this step and Harsk's power can trigger, replacing shuffle into reload. No uncertainties here. However, there is a Check if Villain escapes step of an encounter few bullet points later. That one replaces the "shuffle the bane" with specific instructions. If that is replaced by Harsk's power as well is in question, but I would guess so. Most other powers reloading monsters specify a non-villain monster, probably to prevent confusion such as this.

Hum...
"instead of shuffling it" means - at least - Harsk's powers triggers when a card (say a story bane) is supposed to be shuffled in its location. For example when you do not defeat a classical Henchman. But if it's a classical villain (by classical I mean there is no specific scenario rule so the villain follows the rulebook rule) it never gets shuffled back into the location. It escapes and follows a specific process. So Harsk's power wouldn't trigger. No? Maybe you could argue if the villains location is the only open non guarded location in that case it triggers since the specific escaping process actually boils done to shuffling but that doesn't seems straightforward to me.

Added to FAQ.