I also do not seem to be able to remove someone like Gnarri
I believe this is by design, one of the very first scenario scroll popups you see mentions it (although it is easy to miss, so perhaps there should be an explanatory error message each time you actually try to do it?)
The text of that popup says that you will not be able to remove or disband champions, so to be careful who you hire. However, most people who join your party don't give you a choice, so it ends up being an exercise in frustration. I didn't ask for Janusk, ok; I'd rather keep some of my leather-clad spearmen with fury and bloodthirst. Also, I have way too many water mages. Gnarri is the only one that is a real choice, and even there, you don't realise that you are making a permanent choice just by approaching him a second time - it would be nice to have a final confirmation to allow him to join your party. With others, it is not at all clear from initial dialog whether they will give you a reward item or their own servitude, so you do their side quest anyway and sometimes end up with people you didn't really want. And you can't even sacrifice them in combat 
Regarding Relias' cowardly behaviour, that happens when you have nine units in your stack. The game kills units at the start of combat to limit it to nine per side, but I think there is an additional off-by-one calculation errors that does it even when you have exactly nine. I literally had to sacrifice the two disciples that you get given just so that I could have Relias stick around in battle. See also: https://forums.elementalgame.com/434745
