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Very well done! I'd love to know how you made the key mechanic and characters disappearing when you give them items work, because I was so wanting to put stuff like that in my game.

I too am wondering this.

I think when you pick up a quest item, the game teleports you to a different room that looks the same, but the enemy is now an item. 

Very good explanation ;)

Just and exit in the same place of the item to pick. The new room has an item with the same picture of the sprite