In the Rewards section of the Manor of Ravens quest "My House, My Rules", it says 'If Skarn was not defeated, the overlord receives the "Endless Supply" Overlord card." However, in Special Rules, it says "When Skarn suffers damage equal to his Health, he is not defeated." It just describes him as being unconscous.

Thus, strictly as written, he is NEVER defeated. But I can't imagine that was the intent.

So is the reward meant to be that he only gets it if he was never knocked unconscious once? Or if he wasn't unconscious at the time the quest ends (a subset of the heroes winning)? Or was it meant that if the heroes win at all, he doesn't get it? (If so, why not put it in the "if the overlord wins" section?

If you win the quest, is he defeated?

In the flavor text it implies it, but winning has nothing to do with attacking Skarn directly (you are trying to collect stuff), and flavor text isn't really something to use as a basis for what this could mean.

But even still, with the flavor text, if that was the definition of "defeated", why does it make it a separate line instead of adding the card to the Overlord's win rewards? In other quests, there are rewards similar that don't depend on winning but on another condition, like a Trollfens quest where the OL gets a card if a Plague Worm escapes, even if the OL ultimately loses. On the surface this seems like such a quest, but it doesn't seem to work that way on paper.

Even winning the quest for the heroes doesn't explicitly say Skarn is defeated, just the flavor text implying that he crumbles to pieces (but obviously isn't "all dead" as he is back in the next quest).

Because there is a conflict of words there, I would submit the question, were I you. My best guess (based on what you've said) is- if Skarn at any point had damage tokens on him equal to his health, that would be "he was defeated." That may be wrong.

Here's the answer I got:

So basically, it seems it would be "he gets the card unless Skarn was knocked out at least once during the quest"