It turns out I had to assign the "Missing Formations" with the drop-downs. Those formations however are completely empty. I have a party of 4 toops. No idea why I need to create empty formations...but at least it works.
So it's my first game, I have never even seen the deployment screen. I was chasing a few bandits and an AI lord joins the battle. I cant exit the deployment screen, am completely stuck - the 'ready' button is unavailable no matter what I do. Am I an idiot or what is going on?