I don't know why that happens, I just gave up after that and decided to make a different choice, so, instead of losing against the smile, kill it, and then 1 of 2 things can happen, and it deppends whether you used all of the bombs the guy from outside the village gave you or if you still have them with you.
1.- If you used all the bombs, when you try to leave the village you won't be able to, because you don't have the bombs to blow the entrance, so you get stuck there, and then you can proceed with the "homeless" route, there are some other choices inside the village and you can get 2 endings if I remember correctly, anyway, once you used all the bombs and kill the smile is all up to you to get the scenes with those guys.
2.- If you saved the bombs even after killing the smile, you proceed normally with the story, and you can get the other endings. And that weird bug (or whatever that is) will not be a problem.
Also, I don't know if that is actually an error from the game (when you get stuck after being defeated by the slime), maybe you can get other scenes from there, but I doubt so, I've got pretty much all the scenes (only 4 left), and the scenes left Im sure I can get them if I make other choices in the routes already played.
I don't think I want to do a walkthrough xD, but if you have any doubts, and if I know the answer, I'll try to help.