This game is really starting to .....well....bug me.
Now I get back to the keep & everything has been reset.
All the people I recruited are there, but they introduce themselves as if they & I just arrived.
All my work is undone.
I went back to an earlier save & the same thing still happens.
Is having a good fort needed or just a side quest?
Can I just forget about it & continue looking for the silver sword?

Judging from how much trouble you've been having, and the bizarre nature of it, I think it's time you talk to GOG tech support. There's no reason you should be having that much trouble. I'm speaking as someone who never had to restart any of the campaigns. (Running Platinum edition, no MoW.)

I'd be interested to see if this is a GOG version issue as well. I've been through the campaign three times, but on the retail version, so can't speak to the GOG version. I don't know why GOG's would be different than the fully patched retail versions though. Even fully patched, the game has bugs, no question on that, but you're definitely experiencing more issues than you should. It's too bad too, because it's a great game series but constant bugs can really make any game a miserable experience.

Well I got through to act III & the problem is still there.
Will it stop me finishing the game if I just forget about upgrading the fort?
Obviously I won't be able to re recruit Katriona when she is standing right there & the report shows I have no Sargents

Edit:
I may be on to something.
I run the setup program as administrator when I installed it.
When I looked in the game directory only Neverwinter Nights 2 Complete, nwn2.exe, & nwupdate.exe had the admin shields.
So I went into the properties of nwn2main.exe, nwn2main_amdxp.exe, NWN2Launcher.exe & set them all to run as administrator.
Then went back to an old save from before the bug & replayed it & I still have all the upgrades (previously replaying from this save, the bug was still there)
So time will tell if this fixed it or just a coinsidence.

Nope. There'll be fighting and the fighting is easier if your fort and troops are top quality.
Basically it'll be a bit tougher for you with crappy fort, but it's not impossible or anything.
The last chapter is the same no matter how and what you did with the fort.

--
Edit. If your rights adjusting did the trick, you should definitely report it to gog staff.

No it didn't, I still have my keep upgrades, but the special missions just went in a circle.
So I decided to move on to Act III, but Ammon Jerro's haven wasn't on my map, in spite of being in my journal.
Going back & repeating the talk with the scholar made it show up again, so still buggy as hell.

I can't finish this game.
From what I can tell from google, Kana is meant to tell me where to find the shadow reavers, but no amount of coming & going is making her bring it up.
So I can't continue.
Unless someone knows a way to get the shadow reaver camp on my map.

To make sure, you already got the true name scrolls and have Zhjaeve and Ammon Jerro in your party?

Yes. & they each have a copy of the scroll.

Which game?
I am guessing you are not referring to one of the over 1000 community made ones (very robust module creator engine)...

So which of the official games are you talking about?
Neverwinter Nights Original Campaign
Shadows of Undrentide
Hordes of the Underdark
Kingmaker
ShadowGuard
Witch's Wake
Pirates of the Sword Coast
Infinite Dungeons
Wyvern Crown of Cormyr
Neverwinter Nights 2 Original Campaign
Mask of the Betrayer
Storm of Zehir
Mysteries of Wesengate

Neverwinter Nights 2 original campaign. (GOG version)
But I think I've got it sorted with the extra administrator rights.
It didn't work at first because I was continuing from a previous saved game & the corruption was already there.
But I started a new game & am part way into Act III without a hitch, so many things are working properly now that I didn't even realize were broken in previous games.

great to hear everything is working now

Do make a report to support, they could probably fix the installer so no-one else would run to rights issues.

I have just done this, I just wanted to get far enough into the game first to be sure before replying to my support ticket.