The reason Otsuru seems to be Not Allowed to Grow Up in the first anime is because that's how Afro and Jinno remember her—Any time the dojo is seen, it's always in flashback.—Wulf
The basis of the story, is that only the Number 2 Headband Wielder is able to go after the Number 1. Despite this, Sio and Kuma clearly attack Afro and steal his Number 1 headband at the beginning of Resurrection. While this could have easily been made a retcon, Afro instead has to spend the first half of the sequel tracking down the Number 2 so he can finally re-challenge them.
The idea is that since he wasn't actually wearing the headband and acting as the Number One, it was okay.
As I recall, Kuma at least at one point had the Number 2 Headband (along with every other headband he could get his hands on. Sounds like it's within the rules to me. He could've just discarded it later.
How the hell did Afro's dad kill Sio? She was the number 1 and was clearly wearing the headband.
Because she stole the headband instead of challenging and winning it. Thus, she never got its godlike powers. We never see her sitting on the top of the mountain, after all.