The griffin is immortal.

I went down into the Dungeon, and Aidan was there. I couldn't handle it, so I went back to the Castle to build up my army, and after a few turns, it said I lost. What's wrong?
A few weeks later, Aidan wasn't there. I made a few turns, and it said I lost.

That's how it's supposed to be. Aidan rushes to help Fiona, Markel kills him, and says that it was done by wandering undead. If Aidan reaches the garrison, the mission is lost. There are boots and a flag nearby, so you can catch up to him. Just load before the dungeon and build up your army there.