Key word in the description of that power of his: "ordinary".
His fire can't be extinguished by ordinary means, but magic resistance defends against it, and magic/magecraft (water aligned or otherwise) or other supernatural powers that are stronger can extinguish it. And compared to similar things, his fel fire is mid/high level as far as supernatural mystery is concerned, so most characters in the RP could defend against it in some way.
And since Neo's magic resistance works like that, I argue for the fact that his clothes should be on fire. Can't be killed by them, but his magic resistance doesn't dissipate offensive effects, does it?
Also, Gwyllt is really not that overpowered. I wrote his physical stats in as mostly Cs, which means he's a step above mortals and average supernaturals beings in the scale I've been using for my character sheets (E - regular human, D - top human/inhuman, C and above - various degrees of superhuman), but compared to knight class Servants, beings like Wanderer, and stronger mages, he's lackluster unless he pulls out all the stops. Which, might I add, is what leaves him most vulnerable.
One more thing. I think we're losing ourselves a little in the argument, but I'm not insisting because I want Gwyllt to kill Neo just like that. Their discussion has been escalating, and Neo has been stepping on Gwyllt's toes, and now the rider's had enough with talking.
So Neo going "lol nope just gonna roll on the ground to put it out and continue TALKING bitch" seems really anti-climactic to me. Also felt kinda bland the way you wrote it. Same with dodging the sword swing earlier.
Like, just "I dodge", "I put out the fire". Maybe it's just me, but those felt cheap to read because it was like you were waving off what happened just so Neo could continue speaking his justice. I get it that Neo is pretty fearless, but does he really feel nothing at a demonic rider attacking him twice with intent to kill?
I didn't say anything the first time, cause, okay, he dodged the sword swing, that seems reasonable given his experience. Now it's like you're killing the narrative tension to keep the story where you want it.
If I'm misunderstanding anything do correct me, but I'm only trying to be honest with what I see here.
I might be going overboard with saying all this, but I felt like I needed to say it. Mind you, I have no issue resuming my next post with Gwyllt moving to attack as Neo talks but stopping because Wanderer arrived.