Resolving the policy by applying the updates in order:

- duplicate_policy: first
- fold_case: true
- tombstone_wins: true
- trim_ids: true
- list_merge: replace (update 5)
- nested_merge: true (update 4)
- null_mode: ignore (update 4)
- version_floor: 2 (update 5)
- audit_all: true
- empty_id: skip
- order: id (update 6)
- unknown_fields: keep (update 6)

Payload shape: I assume the payload is either a list of events or a dict with an "events" key, and handle both.

Implementation decisions:

- **Dedup:** the key is (normalized id, version). The position of the first occurrence is kept. With policy first, the first event is selected. With policy last, the last event is selected. Sorting uses the selected event's original index.
- **Processing order:** sort the deduped entries by (version, selected index).
- **Deletion:** applied if the record exists. Otherwise, if tombstone_wins and the id is not already tombstoned, it installs a sticky tombstone and counts as applied. Everything else is blocked. If a deletion removes an existing record, the tombstone is also set when tombstone_wins.
- **Non-deletion on a tombstoned id:** blocked.
- **Merge:** create {} if the id has no record. A null value is ignored, meaning the key is skipped. With nested_merge, two dicts merge recursively. Otherwise the new value replaces the old. List merge is replace. The merge is applied to deep copies, so inputs are not mutated.
- **Records:** a record is only created on an applied non-deletion. After a deletion without tombstone, a later non-deletion recreates the record.
- **First processed index:** saved per normalized id at its first processed event, including blocked ones. Under order=id this does not affect the sort.
- **Output:** records sorted by id, audit in processing order, and every processed event is audited.

```json
{"files":{"main.py":"from core import run\nfrom policy import POLICY\ndef evaluate(payload):\n    return run(payload, POLICY)\n","policy.py":"POLICY = {\n    'duplicate_policy': 'first',\n    'fold_case': True,\n    'tombstone_wins': True,\n    'trim_ids': True,\n    'list_merge': 'replace',\n    'nested_merge': True,\n    'null_mode': 'ignore',\n    'version_floor': 2,\n    'audit_all': True,\n    'empty_id': 'skip',\n    'order': 'id',\n    'unknown_fields': 'keep',\n}\n","helpers.py":"import copy\n\ndef norm_id(s, policy):\n    if policy.get('trim_ids'):\n        s = s.strip()\n    if policy.get('fold_case'):\n        s = ''.join(chr(ord(c) + 32) if 'A' <= c <= 'Z' else c for c in s)\n    return s\n\ndef merge_val(old, new, policy):\n    if isinstance(old, dict) and isinstance(new, dict) and policy.get('nested_merge'):\n        return merge_obj(old, new, policy)\n    if isinstance(old, list) and isinstance(new, list) and policy.get('list_merge') == 'unique':\n        res = list(old)\n        for x in new:\n            if not any(x == y for y in old):\n                res.append(x)\n        return res\n    return copy.deepcopy(new)\n\ndef merge_obj(base, upd, policy):\n    res = dict(base)\n    for k, v in upd.items():\n        if v is None:\n            if policy.get('null_mode') == 'delete':\n                res.pop(k, None)\n            continue\n        if k in res:\n            res[k] = merge_val(res[k], v, policy)\n        else:\n            res[k] = copy.deepcopy(v)\n    return res\n","core.py":"import copy\nfrom helpers import norm_id, merge_obj\n\ndef run(payload, policy):\n    events = payload.get('events', []) if isinstance(payload, dict) else payload\n    floor = policy.get('version_floor', 0)\n    groups = {}\n    order_keys = []\n    for i, e in enumerate(events):\n        nid = norm_id(e['id'], policy)\n        if nid == '':\n            if policy.get('empty_id') == 'raise':\n                raise ValueError('empty id')\n            continue\n        if e['version'] < floor:\n            continue\n        key = (nid, e['version'])\n        if key not in groups:\n            groups[key] = [i, i]\n            order_keys.append(key)\n        else:\n            groups[key][1] = i\n    last = policy.get('duplicate_policy') == 'last'\n    items = []\n    for key in order_keys:\n        first_i, last_i = groups[key]\n        idx = last_i if last else first_i\n        items.append((key[1], idx, key[0]))\n    items.sort(key=lambda t: (t[0], t[1]))\n    records = {}\n    first_idx = {}\n    tomb = set()\n    audit = []\n    tw = policy.get('tombstone_wins')\n    for n, (ver, idx, nid) in enumerate(items):\n        e = events[idx]\n        if nid not in first_idx:\n            first_idx[nid] = n\n        applied = False\n        if e.get('deleted'):\n            if nid in records:\n                del records[nid]\n                if tw:\n                    tomb.add(nid)\n                applied = True\n            elif tw and nid not in tomb:\n                tomb.add(nid)\n                applied = True\n        else:\n            if nid not in tomb:\n                cur = records.get(nid, {})\n                records[nid] = merge_obj(cur, e.get('fields', {}), policy)\n                applied = True\n        if applied or policy.get('audit_all'):\n            audit.append('%s:%d:%s' % (nid, ver, 'applied' if applied else 'blocked'))\n    out = []\n    for nid, f in records.items():\n        if policy.get('unknown_fields') == 'drop':\n            f = {k: v for k, v in f.items() if k in ('name', 'tags', 'meta')}\n        out.append((nid, copy.deepcopy(f)))\n    if policy.get('order') == 'id':\n        out.sort(key=lambda t: t[0])\n    else:\n        out.sort(key=lambda t: (first_idx[t[0]], t[0]))\n    return {'records': [{'id': a, 'fields': b} for a, b in out], 'audit': audit}\n"}}
```