Possessed Armours like to sometimes parry your attacks which causes them to do 0 damage.
However I don't see how you're only doing 0.5 damage per hit. Even an early game Primitive Spear is enough to defeat it. Possessed enemies are usually focused on cursing you, which gives you quite a bit of leeway to do damage.
What race and Race level are you?
However, this phenomenon is actually occurring in my save data. If this is unintended behavior, should I provide screenshots and the save data?
For reference, the maximum damage I dealt was 4.3 using the "Blunt Axe."
However, I cannot deal this amount of damage consistently; most hits result in a "miss," 0 (likely a parry, though it happens very frequently), or damage of less than 1.
