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So I'm in a lava level and the AI is spamming spells really quickly. I keep running into the problem where my mana goes into the negatives and then just never gets back up. It looks like I lose a massive amount of mana every time a knight captures one of my castles. Even if I have a massive amount of walkers and small buildings, I still can't even raise/lower a single tile of land.

What's causing this? How do you beat this? Normally you can just out-expand the opponent no matter what, but this negative mana makes that impossible.
Update: I beat the level (Shiquehill).

I turned my game speed down using the keyboard shortcut (shift+S to decrease speed, alt+S to increase). After doing so, the negative mana issue went away completely. I believe I was dealing with a bug where the game couldn't properly calculate my mana. Maybe because the AI was casting earthquake or volcano every few seconds.
Alright, I'm running up against the bug again. This time it's in a snow level. Slowing the game down is not getting rid of the negative mana issue this time. I managed to find a YouTube video of a similar stage to what I'm on right now. You can even see the player losing mana from knight attacks, but nowhere near as much as I'm losing. The player is using keyboard controls with computer assist, so he's able to build faster than me. What could be causing this issue? If only this game weren't older than me, maybe someone would be around to check the code.

I can't post links right now, so here's the title of the video: Populous - (1989) - Bullfrog - Level 271 - Alpkoptory - Let's Play - Peter Molyneux - DOS - MS Dos
FIXED... kind of.

Setting CPU cycles to 4000 has dramatically improved things. I saved my game just before the CPU's first knight attacked, then reloaded over and over while tweaking different settings in dosboxPOPULOUS.conf. Changing memory, CPU core, and CPU type did nothing. But after reducing the CPU cycles from 7500 to 4000, the knight's attack stole no mana from me. Interestingly, this seems to not be the correct behavior. On subsequent tests, the attack did steal a chunk of mana from me. However, it's now well within reason and no longer the game ending threat that it was before.

There are still a lot of oddities surrounding this issue. Strangely, the enemy's knights now die far more easily than before, and I also get a large chunk of mana back when I kill them. Setting my Walkers to Fight then Settle seems to be much more effective, too. They tended not to accomplish much without supervision, but this time they nearly eradicated the enemy once I gained the upper hand. I still see my mana bar swing wildly sometimes, but I'm definitely not in mana debt hell like I used to be.