Mr Peabody starts the game out of play.

Once he is in your play area, where does he go when he is defeated?

The Encounter discard pile or returned to "out of play"?

If to the Encounter discard pile, how does it work if you draw him again?

Tried to search RRG and current FAQ, but couldn't find a clear answer.

No opinions, please... if you could cite a rules reference, that would be great (and also help me learn the game better)

Thank you and hope everyone is staying safe.

--JP

I think this is correct by the rules, but it's a little weird.

Defeat: A defeated asset is placed on its owner’s discard pile.
Owner: A card’s owner is the player whose deck (or game area) held the card at the start of the game...

Since Peabody is owned by the scenario and there are no other instructions (see: Harold Walstead and Adam Lynch), he would go to the scenario discard pile. If he were drawn after that, since there are no revelation instructions for someone to take control of him (see: Jazz) it would just be a no-op card.

Rules Reference, Page 16 under Ownership and Control

Quote

A card's owner is the player whose deck (or game area) held the card at the start of the game.

A player controls the cards located in his or her out-of-play game areas (such as the hand, deck, discard pile).

The scenario controls the cards in its out-of-play game areas (such as the encounter, act, and agenda decks, and the encounter discard pile).

• Cards by default enter play under their owner's control. Some abilities may cause cards to change control during a game.
• If a card would enter an out-of-play area that does not belong to the card's owner, the card is physically placed in its owner's equivalent out-of-play area instead. The card is considered to have entered its controller's out-of-play area, and only the physical placement of the card is adjusted.

So, if Mr. Peabody (or any set-aside Story Asset) is defeated or discarded, it returns to the Out-of-play or "Set aside" area. In the case of Mr. Peabody, there's no possible way to get him back if he gets defeated or discarded.

There is also this relevant bit on Arkham DB regarding the Event Card Calling in Favors (which allows you to return an Ally, including Story Allies, back to your hand):

Quote

Q: Can you use Calling in Favors on Helpless Passenger or Innocent Reveler? A: You can’t actually return them to your hand since you don’t "own" them. If you try to return them to your hand, they will instead go to their owner’s equivalent out-of-play area (see Ownership & Control: "If a card would enter an out-of-play area that does not belong to the card’s owner, the card is physically placed in its owner’s equivalent out-of-play area instead. The card is considered to have entered its controller’s out-of-play area, and only the physical placement of the card is adjusted.") However, in this case, the owner is the scenario itself, and the scenario has no hand. So it would instead simply be discarded (this would of course trigger the Forced effect on Innocent Revelers, so probably not the best move). But since it still is considered to have returned to your hand, you can still complete the remainder of the effect on Calling in Favors.

11 hours ago, Faranim said:

So, if Mr. Peabody (or any set-aside Story Asset) is defeated or discarded, it returns to the Out-of-play or "Set aside" area.

I'm not sure about this. Defeat specifically says it goes to the owner's (scenario's) discard. And while not necessarily conclusive there are a number of scenario assets with "When this is defeated, remove it from the game".

Thanks for the insights. It's an edge case, to be sure, but appreciate the reeponses.