When starting battle with Yig it says every investigator is Cursed, if a Character is Blessed are they treated as normal or are they Cursed.

alboy said:

When you are Blessed and Cursed you lose both cards.

-Frank

In spirit of other game mechanics surrounding blessings and curses, I'd play that an investigator would loose the blessing and then start the battle as neither cursed or blessed.

As Yig is an Ancient One do the normal rules apply if your lnvestigator is blessed.

If you're asking whether Blessing works as normal during final combat, yes it does. Though against Yig you would lose it at the start of battle when everyone gets Cursed.

Always get Blessing for everyone before the AO awakens!