Hi Duck duck number 2,
I hope you don't mind me asking clarifying questions as it will help me to isolate the problem yu are experiencing. If you are in the correct part of mission 3, Samuel should have told you to try betting with Katnir. When you "consult" with Water Mage, he should mention that you have Ruwin recruited and now to try convincing Katnir. You need to have "paid" your debt to the forest (the passage fee of 1000 gold.) If you haven't paid this yet, "Wander" in the forest and Katnir will ask you if you're ready to pay. When these two conditions are met, you should be able to recruit him after you beat him in a duel. In this version, he will always be level 3. Let me know if you're still having problems with these conditions met. I will also try to add the detail about the forest fee in the consultation ^^;; hope this helps!