Lelu and the Sorrow (standing in for a Daydream) are meant to prevent him getting targeted by being within 3". Unfortunately, Ian's clever positioning of his Ronin meant that Dreamer was in melee range but the Nightmares were just out.
Under attack from Pythahoras' Theorem itself, Shadowy Form wasn't able to protect him. With only 1 Soulstone in his Cache he succumbed to the Ronin's attack, and with Chompy already heavily wounded the Ronin was able to kill him when he appeared, in a single activation too!
Lesson learned: Positioning is key for Shadowy Form. Dreamer should be slightly behind other Nightmares, in a kind of circular arc formation. Also don't pull Chompy directly towards a Daydream while he's stood on top of a high rock!