by Dexter345
I would say that Belthir is not available for the Overlord to use in Encounter 2 if he lost Encounter 1.Setup specifically says that Belthir is not placed during setup.
Reinforcements tells you what to do if the Overlord won Encounter 1 and says nothing about what to do if the Overlord lost Encounter 1.
The only weird bit is under Monsters, where it says, "Belthir may wield a relic during Encounter 2, but only if the overlord won Encounter 1," which implies that Belthir can be there, but without a relic. However, I think that may be accounting for the following: the Bones of Woe aren't a weapon-type Relic, so this was put in there to explicitly forbid using it while Belthir is technically under the Overlord's control but off the map.