Speaking out only because it's what I do, there was some miscommunications on both ends. Windel made the assumption that everyone knew that thanks to KoL's Co-GM privilege, she has the right to make her characters however she wanted. Lugu assumed from what was written that we the players have a fairly free reign with how the story develops, including our characters, who are instrument to that story.

I usually don't compromise, but since I'm only giving a suggestion out of the goodness of my heart (And totally not because I'm making a bid for power here) I'll offer it anyways; we're going to need some vet level characters to help give exposition and guidance for our newblets. If Lugu is willing to learn more about the world so his character can serve as a sort of guide for our newblets, his character could be incorporated just fine, as Windel suggested. This will also allow Lugu not to have to make much more alteration nor simplify his character, something I'm sure no one wants to happen. 

And for future reference, Windel while you're going to let us, the players, guide the story, you should also try to make sure you can summarize and perhaps give general ideas of what is going on in the story as it pertains the the players. For example if you had said "Everyone is trapped in the basement", that should give little room to make little mistakes like what happened. 

Of course I can also handle this, should I be given the authority to do so.