+s/-s in conflict versus tests

Let’s say an elven ranger (wearing chainmail, wielding a bow) is fighting a tomb guardian (Might 2, wielding a spear). They both Attack. The elf rolls 3 successes and the tomb guardian rolls 4.

Since this is a versus test, how do the +s and -s modifiers influence the outcome of this test?

I can see two plausible outcomes:

  1. The elf wins and deals damage:
    The tomb guardian initially succeeds, but the elf’s armor reduces its successes by 1, creating a tie. Now that they’ve tied, the elf’s greater might grants +1s. The elf therefore succeeds and damages the tomb guardian by 1. The elf marks a successful Fighter test.

  2. The tomb guardian wins, but doesn’t deal damage:
    The tomb guardian succeeds, but the elf’s armor reduces its margin of success to zero, so the tomb guardian deals no damage. The elf’s greater might doesn’t help it because it failed the test. The elf marks a failed Fighter test.

This thread implies the first interpretation is correct, but I wanted to check that I’m understanding correctly.

To clarify this very issue because it can be brain breaking and it’s not worth the confusion, we’ve started ruling that armor just reduces one point of incoming damage. I wold use outcome 2.

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