Other than your starting character creation points, what is the difference between the difficulty settings? ex. hard mode only shows that you have lower stats but does it make the enemies harder?
If you want to lose, use the surrender button and the perk tactical defeat. Reason 1: No chance of accidentally winning. Reason 2: Free exp while "adventuring".
I just figured out the healing level up thing. In easy mode, level ups fully restore spirit, energy, and arousal. In hard/ normal mode level ups partially restore energy and arousal. For some reason, this info is not in the wiki.
Could be the challenge mod nerfing level ups. Other than that, I don't know what could be causing differences.
Forgot to add this. The partially thing came from me leveling up after beating the first salaris encounter in the caverns I remember that my energy was full but arousal was left at around 30 ish. (I don't fully remember details)