What version are you running 38.1, 39.1, 39.3
Also if it gets to the error out put that would be helpful to post.
I did read the part regarding it hard freezes.
Version 39.3
No Error output, unfortunately. Upon playing further it appears that it happens with more events than just the catfight. There is an event with a trio of employees talking around the watercooler about the MC, and the freeze seems to happen at a very similar point.
Basically, once one of them is set to walk away, and the game redraws them as such, it freezes. Nothing else seems to be an issue, but if you continue with the event the program stops responding and you have to end the process.
Edit: Derp. I just realized that there is another instance of that event in the Mod folder. If I had to guess on the fly, it seems to break at the command:
$ scene_manager.remove_actor(person_one)
I don't think the "person_one" is the issue, because that function call appears to be at the break point with other arguments as well (loser, person_two, etc), unless the code is losing track of who is person_one and person_two, and is trying to enact an action on the wrong character? Just pure conjecture on my part.
That said, looking at other paths in the code for the Cat Fight event, it seems to also fail on the "Stop the Argument, side with no one" path at the following:
$ scene_manager.update_actor(person_one, position = "walking_away")
$ scene_manager.update_actor(person_two, position = "walking_away")
I don't know where to find the "watercooler" event code, so I can't check that.