barbarian rule wrong?
It seems that I am erroneously losing a city when the barbarians come when I have an activated knight. Scenario: 3 cities on the board, 2 activated knights (1 is mine) and I lose city. Am I correct in thinking that this should not happen?
It depends. The Barbarians win and someone is going to lose a city. If there's a player with one city (not a Metropolis) that didn't contribute an active knight, then that player is the one to lose a city. But if there's no such player then you and the other guy that provided one active knight are both going to lose a city (provided they're not Metropolises).
Yep there are multiple scenarios where you will still lose the city besides above said.
For example quite common case in 3 player game is when someone builds 2nd city but there are only 3 knights (1 per player) active => all players lose cities.
In case some player has no cities to lose he actually can only gain from barbarians (defending and getting point or progress card) but cant lose. In case of invasion that player is disregarded and battle who loses city is between players who have any.