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I submitted the save file linking to another thread with the same issue that I had found posted before this so it seems you guys are already invetigating.. I can submit here as well but I saw it as a waste of time with it being the same issue. I will do it anyway just for your reference.

For anyone having this issue I have found a temporary work around. If another army attacks and kills the bugged bandit party it will respawn with full troops which can then be attacked by you. Best thing is to wait nearby until you see someone attack the party and once their battle is over look around and you should find a replacement bandit party you can defeat for the quest.

For anyone having this issue I have found a temporary work around. If another army attacks and kills the bugged bandit party it will respawn with full troops which can then be attacked by you. Best thing is to wait nearby until you see someone attack the party and once their battle is over look around and you should find a replacement bandit party you can defeat for the quest.

Apologies I just submitted a similar thread before seeing this. But yes I had the same issue. I was able to load a slightly earlier save in which the party accepted battle and could be defeated. The save that worked was an auto save made during the quest and the save where the bug appeared was a save&exit made almost exactly at the same point as the autoave.

A qick followup!. I just now 'fixed' the problem. Not sure if there was a specific action that performed but the steps i took were to reload an old save where I was able to interact; entered and left a settlement menu just to make sure it worked; then from that save I reloaded the save that was presenting the problem and after moving across the map for a few seconds I clicked on a settlement and low and behold the settlement menu appeared!
So yeah bit of a strange bug/fix as i didn't really do much other than reload from an old save. I also tried it a few times and one of those times the bug persisted after reloading but then after moving around the map a bit it stopped on it's own and i could interact with everything again.