Nanami keeps dying and I don't know why. She has over 121 DEF (her's is 221), I pressed X in time and my character jumped forward with his weapon, I have all 108 stars, and Shu was asked to come in and talk. I even got all five of the squirrels. If all these conditions were met, why can I not get the best ending? All I get is Riou leading the country. I also keep hearing of a duel with Jowy, but I was not challenged to a duel with him.

Because you actually have to go to Tenzan Pass and duel Jowy for the duel to happen.

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Doctorum Non Urina Singulus.

Yeah, like Raww said, you need to decline the job of leading the county. As you leave the meeting room, you have a brief discussion with Viktor and Flik, then you're free to venture off alone. Go to Tenzan Pass where you agreed to meet Jowy at the beginning of the game. He'll challenge you to a duel, but you need to refuse to fight back (defend), once Jowy offers you his Black Sword rune, decline REPEATEDLY.

Eventually Lekknat will appear and the best ending will be upon you.

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PSN: FreshMetal80