Great. The issue was not the animation itself; it was BHAV control flow.
There are two relevant workbench files. I initially fixed GGWorkBench.iff, but the object we were actually using was CraftingGnomeWorkbench.iff. In that file, the Finish Carving tree had this bad path:
Make Gnome Object succeeded, the real Odd_Gnome was created, then the BHAV jumped back to the start of the finish animation.
So the game state looked half-correct:
the gnome existed
sell was available
but the Sim never left the interaction
because the success path restarted the finish animation instead of returning
The specific bad flow was in BHAV 4104 Finish Carving: the create instruction was jumping back to instruction 1, which plays the finish sequence again. That is why the Sim put the hammer down, then repeated the last animation forever.
The fix in WorldObjectProvider.cs (line 2460) now finds the gnome-create instruction and points its success path to the drop/reset instruction instead. So after the gnome is made, the tree exits cleanly.
We also updated the trace filter in BillsInteractionTrace.cs (line 100) so future gnome workbench logging catches both GGWorkBench and CraftingGnomeWorkbench.