So having spent 20-30 hours to complete the game at level 48 when I defeat Lilith and equip the unique ring I get disconnected/ rolled back without the item and no unique ring drops when I defeat Lilith again. This is seriously game breaking and totally flawed the whole experience for me even though I was really liking this game before that happened.
That sounds irritating, how is it game breaking?
funny thing this “unique” ring has dropped several times during my leveling at random. Last one i got was a lvl 61 ring same ring better stats i now got both. however i was around lvl 35 the first time i got the ring from Lillith.
However it’s not really that good, you get far better rings later. 
This happened to me too. Very disheartening to lose out on loot tied to a big boss fight. Wouldnt call it game-breaking, but just a symptom of a broken game - forcing people to be online constantly leads to these kind of 100% unequivocally needless bullcrap errors.
Same happened to me just now. Had to talk to the girl again all the cinematics (i could skip some) and kill lillith again. Lost like an hour! Pretty anoying after you feel the victory to get pulled back. It still droped the ring, not very good though.