he didn't drop nothing because you had no health
how the gnome (calling him a gnome now due to mention of the other name possibly being a slur) works is that if you click on him he will teleport to a random unrevealed empty space, unless there are no unrevealed empty spaces, in which case he will give you his XP (think of him like a reward for clearing every empty space)
so what actually happened is that he just teleported somewhere else