Was the nightmare still declared blocked?
Is any combat damage dealt?
Does the MMP deal any damage?

What is the official ruling. I'm having a difficult time to find it. I have my own opinion and we settled it without any problems. I am just asking to confirm or dismiss my own allegations.

Was the nightmare still declared blocked?
509.1h An attacking creature with one or more creatures declared as blockers for it becomes a
blocked creature; one with no creatures declared as blockers for it becomes an unblocked
creature. This remains unchanged until the creature is removed from combat, an effect says that
it becomes blocked or unblocked, or the combat phase ends, whichever comes first. A creature
remains blocked even if all the creatures blocking it are removed from combat.

Is any combat damage dealt?

510.1c A blocked creature assigns its combat damage to the creatures blocking it. If no creatures are
currently blocking it (if, for example, they were destroyed or removed from combat), it assigns
no combat damage.

Does the MMP deal any damage?

quote:

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509. Declare Blockers Step

509.1h An attacking creature with one or more creatures declared as blockers for it becomes a blocked creature; one with no creatures declared as blockers for it becomes an unblocked creature. This remains unchanged until the creature is removed from combat, an effect says that it becomes blocked or unblocked, or the combat phase ends, whichever comes first. A creature remains blocked even if all the creatures blocking it are removed from combat.

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So, even if the blocker goes away, the attacking creature is still considered blocked.

Then...

quote:

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510. Combat Damage Step

510.1c A blocked creature assigns its combat damage to the creatures blocking it. If no creatures are currently blocking it (if, for example, they were destroyed or removed from combat), it assigns no combat damage.

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