Lydia was fighting him and I used the Sanguine Rose and then stayed back using Firebolt on him. Lydia and the Dremora chased him to the back area with the wall and I was healing and all of a sudden the fighting stopped and the red dot was gone from the compass. I started looking for him to find the mask but couldn't find him anywhere. I could hear heavy breathing though. Then as I was about to give up and reload, he reappeared and the fight was on again. Has this happened to anyone else? I sure love this game; you never know what can happen.

Creepy.

Most of the Dragon Priests flee from me (attacking retreats - they're not running and screaming because I'm so intimidating ) and one of them tried to go down a hallway or behind something tall like a modesty screen, but I don't recall which Dragon Priest it was. I've never lost sight of a 'live' one though.

haha, yes it was creepy. I have no idea where he was but the missing red dot must mean he became non-hostile while he was healing I guess. I've always had something strange happen in his crypt. One time I wanted to put a Lightning Rune down near it and he popped out when I did it without me using the skull keys. Another time, I had gotten the last skull key and was ready to enter the room to fight him but he was already out of his crypt on the other side of the door we were using to enter the room. Lots of surprises with Otar The Mad.

I guess he wasn't called "The Mad" for nothing...

Whoever locked him away did it for a very good reason. And there's no reason to think he was, you know, dead when they did it. So if he wasn't mad when they locked him in there, he sure as shootin' would be by the time you let him out.