Decided to play a new game and I got to the part where you duel Asleif and he is not spawning in. I tried restarting and reloading saves but he does not spawn in since the game got updated on GoG.

So if he doesn't spawn in, what happens? Does the game freeze?

I take it you're currently on that little island where you duel him, and you've spoken to Nefja and Kettill on the island? During that conversation he should arrive with a few friends, then come up and speak to you - if he doesn't then I take it that conversation hangs while it waits for him?

Posted a similar question on the steam forums and got a Dev response.
It has to do with the old saves data being saved and it screws up some things.
I uninstalled the game, turned off cloud saving because it was reinstalling the old 1.0.5 game saves that were breaking the game since you GoG cloud saving doesn't overwrite data like on steam it just lumps them all on top of one another.
So the only way to fix the issue was the not use cloud saving, after that I was able to get past the Asleif not spawning bug.

Oh, that's good to know, thanks for the update - makes more sense now. I don't use cloud saves so this doesn't affect me - but GOG should probably fix their cloud save mechanic, and in the meantime good to know that they shouldn't be used for this game at least.

Funny enough the Devs for the game didn't even know that their game on GoG had cloud saving. lol.
They said they would talk to GoG about the issues and probably fix the issue for the next patch coming up.

Well it kind of makes sense - it's a GOG mechanic that handles cloud saves, it's all done behind the scenes. There should be no reason for the devs to know about it, and they shouldn't have to do anything special to account for it.

Steam cloud is likely similar in this regard.

From the sounds of things, it looks like GOG still has a few bugs to iron out in this regard...

Looks like GOG needs to communicate with its devs a bit more... ;)