Our second patch (1.2.7171, August 6, 2025)  fixed this issue, which was only a visual bug.

If your journal keeps telling you to give the Soundblaster to Zolio, but you've already done so, you just need to move forward and the journal will update at the next cinematic.

Take the rope behind Zolio's camp, go up and then turn left – you'll then be able to continue playing the game!