Hmm...very interesting. Maybe the game is just glitching up from you soft-resetting so much? I can definitely imagine it doing that. But...maybe you just have to turn off the system and then try to battle Lugia? That's what I would recommend. Get in front of Lugia's Mirage Portal,save the game,and then keep shutting the game off completely and restarting until you get what you want!
Does this answer your question?