Wizard – “Haven” [Campaign 6, Mission 4]

... I have the same problem, but it happens in profile mode:
I talk to Railag, and he and Shadia turn red, but they don't appear in the hero panel (i.e., I can't select them, only exchange them for another hero), and they just stand there.
I defeat Isabel - I watch the cutscene, and nothing happens; there are no more enemies on the map, but the mission doesn't end.

I read somewhere, either here or elsewhere, that the reason is that the hero approaching Railag has too large an army - Railag is afraid.

This mission broke all my records for completion time. Huge territory, many different upgrades (including 2 level-up upgrades) that all my heroes visited, which wasted a lot of game time. As a result, Godric went to defeat Isabel with 200 archangels and everything else in huge numbers. Isabel's army was much smaller. And my Godric is significantly better leveled than Isabel.