Q: How exactly does Flute of the Outer Gods work? Must you first make an Evade or Horror check or are those considered "Combat" checks as well?
A: Evade checks and Horror checks occur before the Combat check is made. The Flute of the Outer Gods only applies to the Combat check specified in step 2 ("Fight or Flee") of combat.
The above is from the FAQ.
The answer doesn't quite spell out precisely as to whether you do in fact have to make a Horror check on a monster before using it--it only makes clear that Evading and Horror checks are not Combat checks. I am inferring however that that yes, since you moved into the location or street area with the Flute you must use it during the Combat check portion of movement which would indeed require a Horror check against at least one foe first (and incidently is it okay to Evade in this case since even though you stay in the location there wouldn't be a Combat check?--seems like no you couldn't use the Flute if you Evade). This seems consistent with other forum posts here which predate this latest FAQ. Am I correct?
And finally I have read on other posts that, unlike spell costs, you need not have the full 3 stamina and/or sanity in order to activate it. It is a "loss" (lose) that can be partially negated for example by Michael McGlenn's ability. Is this the current understanding?
I apologize for raising this again but searches result in multiple threads with sometimes different responses and had hoped the issue was finally understood by all the same way now.