Its a know bug. There is a bugfix that fixes that somewhere here in the forums.
The AI is like a retarded overwieght child. He realy want all those fries, he just does not know how to get them. http://img1.coolspacetricks.com/imag...unny/81776.gif
This is a bug that I believe many have seen before, should've posted it in the bug subforum.
Anyways, that problem, as far as I'm concerned, was fixed in the 1.1 patch, if not, I believe there is a file that fixes it, I suggest you head on over to the thread called "Known bugs and fixes" and search for it there.
Nazgul Killer's M2TW Guide
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My view on the "Friend Zone"
Good things come to those who wait... But better things come to those who never hesitate.
Well it was not in the 1.1 patch, but you can fix it by replacing the descr_sm_faction.txt with the one attached to this thread:
http://www.twcenter.net/forums/showthread.php?t=261329
Yeah, there's a hot fix in the first (KK's) post: http://www.twcenter.net/forums/showthread.php?t=261329 However I'm not sure if the OoTM will be recognized as destroyed if you apply the hot-fix after having destroyed the faction
See if it works and if there are no problems I'd like to close this.