Regarding Balin's magic, invincible characters basically always have some kind of a weakness to their invulnerability and I expect this to be true for Balin as well. For the sake of keeping things balanced this weakness should be something relatively simple that most capable fighters could take advantage of in the right circumstances, rather than something very specific and gimmicky. It could be as straightforward as a time limit to how long he can keep his magic active at a time, forcing him to toggle his magic on and off as needed. This would mean that rather than being constantly invulnerable, Balin is actually only activating his magic whenever he knows he's about to get hit. The way to get around that is an attack that he can't see coming or that is so fast he can't react to it in time. Alternatively it would be possible to just keep constantly barraging him with attacks without any breaks until his magic hits its time limit and deactivates automatically.
Another more interesting option would be some sort of a weak point similar to Achilles and his heel. Anyone striking Balin in that location could bypass his invincibility and perhaps enhance the damage so that even a small wound would be enough to defeat him. As for where this weak point could be located, I think it would make sense for Balin to cover that spot with his clothes so as to not draw attention to it. His outfit is quite revealing, but it does cover his legs as well as his upper back so those areas stand out here. This is kind of interesting since the aforementioned Achilles had his weak point in his heel, i.e. in his legs, and there is another invulnerable hero of legend that had his weak point on his upper back, that being Siegfried/Sigurd. In the epic poem Nibelungenlied it was said that Siegfried's skin became extremely tough as a result of bathing in the blood of a dragon, but while he was doing that a leaf landed on his upper back and covered a small area of his body, leaving it vulnerable. The weakness of Balin's magic could be a reference to one of these legendary figures.
Regardless of what the weakness of Balin's magic ends up being, I expect Gawain to make good on her claim of defeating him with just one finger. If Balin's magic has a time limit then she will run out the clock and knock him out with a finger flick to the head, and if Balin has a weak point then she will poke him in that spot with a finger. In the event that it's possible to get past Balin's defenses with just brute force then Gawain will repeat what Escanor did to Zeldris:
About Dareth, I think he could "die" for real in this arc, sacrificing himself to save his brother. Would be a good way to nerf him.
I don't see that happening. Dareth is not just some random aspect of Gareth's powers, but his twin brother who's a major part of his backstory. The chapter in which we learned of their relationship was titled 'The Twin Swordsmen', which highlights that as their special gimmick. This is why Gareth has no other ghosts helping him even though summoning magics are usually built around such versatility. Caperdonich/Gowther even announced that Gareth's Conjuration "summons and controls his ghostly brother" rather than ghosts in general, so it's possible that Dareth is the only ghost he can actually summon at will. This makes sense in the context of what happened with Diodra's magic recently. He felt betrayed by all of his loved ones and succumbed to despair, which resulted in him awakening a magic called Despair whose magic-stealing ability means he can do everything himself and no longer has to rely on anyone else. By that same logic it would make sense for Gareth's trauma of losing his brother to have caused him to develop a magic that allows him to reunite with his twin again by conjuring his ghost. Controlling other people's ghosts isn't something he wanted to do so his magic didn't need to develop that ability.
Getting rid of Dareth wouldn't be a good nerf to begin with, because ghosts normally can't interact with the living. Dareth phases through people and magic so he would be completely harmless if not for his special sword. What is a normal ghost without such a special weapon going to do, make spooky noises at night? Removing Dareth would nerf Gareth into the ground.
You guys are thinking too much about Despair's power IMO. It's literally impossible for Percival to lose this fight. As shown in the previous chapter, even if Percival's attacks get reflected, he himself can heal.
The narrative is more important than the powers. It makes sense for the clash between Percival and Diodra to result in a tough fight given the amount of buildup Nakaba has put into it so far in this arc and all the tension that exists between them, especially if this is to be the start of a more long-term conflict. Additionally, if Diodra is to be recruited by Beltreipe after the tournament, then we can surmise that his performance will be impressive enough to warrant that. I doubt Beltreipe would be interested in a loser who couldn't even pose a threat to his opponent. A close fight also makes sense in the context of the match being in the semifinals, since the whole point of a tournament is for each subsequent round to be more intense and suspenseful than the last. This is true for both shonen manga arcs as well as real life sports tournaments. Everything in the story points to Diodra being a challenging opponent for Percival, even if the outcome of the match is still obvious. This was already true back when Diodra was weak and his only option was to cheat, and it's even more true now after his huge power-up.
As far as the powers are concerned, you shouldn't be looking at just Despair alone but the whole package. Gatekeeper means that Percival will be exposed to Purgatory miasma if he gets close to Diodra, while Invocation allows Diodra to summon monsters to gang up on Percy. Getting past those magics isn't as easy as it was last time either. Gawain blitzed past the monsters and punched Turret in the face, but if the same thing happened to Diodra he would just reflect the damage. Rothes surrendered after Nasiens destroyed the Purgatory rift and then put a sword to his neck before he could recover and create another rift. Diodra has no reason to surrender in that situation because even if Percy stabs him in the neck the damage is just going to bounce back. What Percival needs to do in order to win is to figure out Despair's weakness while simultaneously dealing with the other threats. Defeating the summoned monsters will give him an opening to get close and then he can either destroy the rift or just tank the miasma for a few seconds. That gives him a moment to poke and prod at Despair to see if he can get past it, until Diodra either forms another rift or summons more monsters. Then it's back to square one again and time for another attempt. With each attempt Percival will take more damage and use up more energy. He will eventually succeed of course, but it's unlikely to be as easy as you make it out to be.
When Balin's defence finally shatters do you think he will be elated or actually fold quickly because he has a super low pain treshhold because he barely remembers what pain even is?
Balin's invincibility comes from his magic so if he wanted to feel pain he could just deactivate it, unless it's like Ban's immortality in the sense that it just works automatically. Balin being hypersensitive to pain could very well be the case since he's sort of like an opposite to how Ban was at the start of NnT. Ban was constantly taking lethal damage and he was so used to it that he barely even reacted to fatal injuries like getting stabbed through the chest. If Balin never takes damage then it would make sense for him to be the opposite of Ban in terms of pain tolerance. If Balin has some kind of a weak spot on him, let's say the result of him concentrating all of his "weakness" in one area to make the rest of his body invulnerable, then Gawain might be able to get a funny reaction out of him simply by poking him in that spot. He's a fairly serious character so he could benefit from possessing a minor comedic trait that shows up every now and then for a quick gag.