So I told Xoti to rekindle the fires of Hel, take care of the living instead of the dead and generally move toward the light, but whenever she visits an adra pillar, she ends up absorbing the souls and going full psycho out of nowhere.

 

Is this tied to her approval (currently at 1) or the number of special encounters with souls (I think also only 1, because I like to switch out different party members)?

Or is it bugged? And if so, is there any fix for it other than going back 20 hours of gameplay and hope it doesn't happen the same way?

In my experience there is a very important dialogue choice when she does the ritual at the temple of Gaun. You HAVE to suggest that she should stop gathering souls (losing rep with her and any other that dislikes irresponsibility), otherwise the quest always ends with her absorbing the souls instead of releasing them.  It is very easy to miss since it is not a mandatory dialogue branch.

Oh, great. Since the option I was looking for (the one she suggests later on, that shepherding souls is different from gathering them) wasn't there at the moment, I chose something else. Guess it's a badly written quest then, not a bug. and I have to go back 20 hours after all. Meh.

Just enjoy insane murderous Xoti and get her cured from her soul reaping addiction in the next game.