This is a known issue. Running away from some boss fights that are triggered by dialog will permanently despawn the boss. This is also in some other quests like The Prodigal Daughter.
I guess lorewise it would kinda make a bit of sense that Sargon doesn't just stand waiting there after you saw through his lies and ran away trying to find an easier prey to lure into the spider den.
this, could bece useful later in the game when or if you decide to break into the golden cove bank so you dont have to kill the bank keeper and get negative rep for many places i ended up without the gem with the only teo opurtunitys in the game, "DOWN to the poimt thoe!" You may be able to get it off him in the arena in freetown hes the 10th battle but its pretty hard especially if your a mage.
The gem you need to get in the golden cove heist isn't the same as the one Sargon used to open the barrier in the Jabal hills. That also makes sense since it would be a really bad bank security system if everyone who had that type of magical gem could open the barrier to the bank vaults.
Also you don't get the gem after killing him in the Freetown arena. I do agree though that the fight against Sargon is very tough. Certainly since you can't use your strongest gear.