Just ran into this bug. Probably didn't help that I was doing my best to keep the patients alive ( with charm but still didn't work too well) and only kill the golem guards (and I confronted Azo had to kill him which caused non hostile npcs to appear)
Just glad I had save 10 minutes before all this happen
while I haven't run into the looping save thing so far (only problem I have with saves so far is it takes a minute for the game to load my save files at the menu screen) I decided to take a look to see if I could find any save files in my temp folder (after learning to find my temp folder thanks to google)
I found C:\Users\YOURUSERNAME\AppData\Local\Temp\Obsidian Entertainment\Pillars of Eternity
that had Obsidian Entertainment folder/Pillars of Eternity folder that holds TempSaveData folder (all its contents get erased whenever ccleaner runs) and I also found loadedsave.zip
I also found C:\Users\YOURUSERNAME\AppData\LocalLow\Obsidian Entertainment\Pillars of Eternity\CurrentGame it was empty until I got into game (it didn't have TempSaveData folder in it)
CurrentGame folder after getting into game had a bunch of .fog/.lvl files and one MobileObjects.save file and a xml doc