Alright, let's sort this out. Officially this is what happened:

1. You pickpocketed and got a key, turning the monk's 8 into a 10.
2. Gobbo got summoned and rolled a 3. With the key that meant you needed a 5 to win, but the rules required you to use a mighty slash immediately anyway.
3. You rolled an 8 on Gobbo, the stage/class rule reduced that to 7 but you still beat Gobbo.
4. You looted the bomb (you incorrectly pickpocketed before beating Gobbo, but I'm counting it as the item you got afterwards) off Gobbo's corpse. Now you needed a 7 to beat the monk.
5. You lost a life when your first mighty slash against the monk failed.
6. You rolled an 8, the stage/class rule reduced it to a 7, and that was just good enough to pass.