So, I can't go into quest mode anymore - instead I go into the scenario selection for story mode, all the way back to only Brigadoon on being unlocked.
Before this happened, I selected Legendary Mode. I did introduce a new Level 1 Merisel into my 38-40 Level party. I was pursuing the Daily Challenge "Complete Two Legendary Quests". The error with Story and Quest modes being confused seemed to occur after the check for completeness of the challenge.
Details: iOS 9.3.4, latest version of app.