The Talisman FAQ states:

Q: If the Destroy Magic Spell is in effect, can a character with a Talisman still enter the Valley of Fire?
A: Yes.

How so? All other Magic Items are negated with Destroy Magic. How is the Talisman not negated?

I think it has more to do with the consequences then game logic. If it is not able to be used the character will have to retreat when in the inner region, this means that he will have to move all the way back to the plain of peril (one space per turn) before he will be able to again try to enter the valley of fire. Now I am assuming that the Destroy magic spell prevents the use of a magic object, otherwise there is no problem.

An other way to think of it though is that you actually aren't using the talisman to enter the valley, but the mere presence of it allows you to enter. And it is still present even though you cannot use it (well, it has no other use anyway).

As always the rules are mostly there to solve disputes and aid to a smooth game, so you can always make house rules to your liking.

Destroy Magic does indeed prevent all Magic Objects from working including a Talisman, but it was decided during compilation of the FAQ to allow a character to enter the Valley of Fire even if Destroy Magic was in effect. (I personally don't agree with this decision, as it was only introduced to prevent a character from being forced out of the Inner Region by another character.) We always play that a character cannot enter the Valley of Fire if Destroy Magic is in effect!

Ell.

I agree with the FAQ completely. Destroy Magic destroys all the effects of Magic Objects, yes. But Talisman doesn't have any effects. Valley of Fire will allow You to enter that space no matter if Your Talisman is a Magic Object, or Object. For Valley of Fire important is only the fact if You have Talisman or not. No matter of the current status of Your Talisman.