Delimbiyra stares at the collapsed half-elf, his brows knit in a mix of concern and unease. “Whatever that was, it wasn’t natural—or normal,” he says quietly, his voice tense. He steps closer, cautious but curious, and checks the man’s breathing and pulse to confirm he’s still alive.

Glancing at the group, he adds, “We need answers, but we’re getting none here. If this is magic—or worse—we need to be ready for whatever comes next.” His gaze shifts to Gym and Zeph. “Keep watch. If whatever caused this is still nearby, we can’t let it catch us off guard again.” He scans the bushes and underbrush for any details that he thought normal before. Are there irregularities? Plants that don't belong, or growing in places they shouldn't? Anything that might be amiss with the Nature around them. (Nature or Survival? 17 or 7, respectively.)

No threats, and Zeph, based on the lack of any physical evidence, the arcane makes the most sense. Nothing seems out of place in this area (any more than everything feels out of place)

Delimbiyra, make a medicine check as you check the man.

Medicine: 14

As you get closer, you see that they are twitching, and closer still they are clearly conscious and the twitches look intentional. Then they start murmuring and before you have chance to react, you see they were casting a spell, and they turn invisible. 

Stealth check is 21. Without blindsight you can tell which way they left with a perception check of 21 or greater.

(Perception 15)

Delimbiyra curses under his breath as the half-elf vanishes before his very eyes. He spins, scanning the area but catching no sign of movement through the mist. “Damn it—he’s gone,” he mutters, gripping his crossbow tightly. “Stay sharp. If he’s as paranoid as he seems, he might not have gone far. Could be watching us right now.” His voice is calm, but there’s an edge of frustration beneath it as he readies himself for whatever might come next.

Perception: 22

Doli lets out a sigh "I was really hoping he was being honest, or at the very least open to changing his ways." Doli's eyes begin to dart around, looking for any footprints or disturbances in the ground. "I see you, half elf. I still truly have no intention of harming you, but we need to be able to converse if we are to resolve this peacefully! And you still haven't even told us your name!" Doli begins heading towards the invisible half-elf.

We are back in initiative. 

The unnamed figure sees Doli coming towards it, and suddenly a large winged and clawed beast appears in front of Doli. It takes a swipe dealing 5 psychic damage (perceived as slashing). Doli looks down and sees a gash along his arm. (I rolled a save on your sheet, and applied the damage already)

Only Doli sees this. The gash included. Everyone else just sees Doli recoil as if he was slashed but no attacker and no wound.

Everyone is up.

(Does this reveal the half-elf?)

Cy immediately reacts to Doli's visible recoil, aiming his crossbow in the direction Doli is focused on. Not seeing the attacker, Cy assumes it might be another illusion or invisible entity and shouts, “Doli, what do you see? Is it another trick?” He positions himself defensively, scanning for any threats and readying an action to fire if an actual target reveals itself ever so subtly.

(They are no longer invisible, but they are hidden, Though with Cy's passive perception, he does see a bit of movement, but no one else. You can take a shot but there is 3 quarter cover due to surrounding trees)

Action: Attack @Half-Elf, Hit 20 (16 if with disadvantage due to hidden), 11 mundane piercing damage, add 2 if sneak attack applies (i.e., if straight hit roll and Doli is within 5ft).
Bonus: He tries to hide in the mist or behind foliage, Stealth: 17  (Cunning Action and he only needs to be lightly obscured)

Zeph will try to move to a position where he can see the unnamed foe and cast Magic Missile (13 damage). He will then move to cover. 

" I believe we have found what was making those strange tracks!" Doli shouts to the party, clueless to what the rest of the party can and can't see

Doli would have tried to deflect the attack like he normally does when in combat, and is surprised to see the gash on his arm, but has no time to think about that now, As he begins to attack the creature.

Action: Cat's Claw: To Hit = (19+5) 24,  DMG = 6 slashing

Bonus Action: Unarmed Strike: To Hit = (7+5) 12, DMG = 7 Bludgeoning

OOC: can I cast fairie fire directed in front of my party mates and not worry of hitting them in the radius?

You can yes (for some reason I never got a notification for this, but I did for other posts around the same time)

Gym cast fairie fire in the space in front of his party mates

(Is there something we are waiting on?)

To summarise the round,

Cy takes a shot, just about hitting (no sneak attack applied). I will say that this allows the rest of you to also see where they are. He then hides (and as per the 2024 rules, benefits from the invisible condition as beat DC15)

Zeph will fire off his missiles, hitting the figure,

Doli makes two well placed attacks, but the creature is fast and manages to evade them. (While affected by the spell, the target treats the phantasm as if it were real and rationalizes any illogical outcomes from interacting with it. For example, if the target steps through a phantasmal bridge and survives the fall, it believes the bridge exists and something else caused it to fall.)

Due to the cover of the trees, Gym's spell fails to find purchase on their body (because for some reason, cover grants a bonus to dex saves too. Was 12 without the cover, but a +5 for 3/4 cover)

Doli takes a further 7 slashing* (psychic) damage as the "creature" attacks again.

The figure hurls two bolts of magic at Zeph (ideally at Cy but can't see where they went) then suddenly shimmers, and now you see a duplicate of them a few inches away (same effect of the cloak of displacement, just as a bonus action feature on the stat block). 

Attack 1: 13 to hit (which misses as I will say you have found half cover. Which is possibly standing behind Gym)
Attack 2: 17 to hit for 8 psychic damage

Zeph, seeing the 2nd attach casts as a reaction Silvery Barbs and grants ADV to Doli. 

Seeing some portion of the figure, Zeph fires magic missles at it for 12 points of damage. 

The second roll was a crit, so the 17 to hit still stands. Following a second barrage of missiles, he is looking quite bloodied (but not quite critical) 

From his concealed position, Delimbiyra watches carefully, his sharp eyes narrowing as he studies the two shimmering figures. His mind works quickly, picking apart the subtle differences between the true figure and the illusion created by the displacement effect. After a moment of focus, he steadies his aim, leveling his crossbow at the correct target.

With practiced precision, he exhales slowly and releases the bolt. It cuts through the air, striking true against the half-elf with a satisfying thud. The hit lands hard, and Delimbiyra doesn’t wait to see the reaction. He immediately shifts deeper into the cover, keeping himself hidden and readying for another opportunity.

Action: Attack @HE, hit 24 for 12 mundane piercing damage (advantage from invisible canceled disadvantage from displacement)
Bonus: Stealth with 13 (I guess that's not high enough this time)

(OOC: The effect on Doli looks like a spell that requires concentration, is this the case here? I suppose the effect is still on, right?)