Death Penalty

When was the last game that punished you for dying or failing a quest?

MH3 does it.

Depending on how many times you die (up to 3) in a quest, you may lose 20 points in hunter rank (or xp) per death.
I've failed alot recently due to some incrediblely hard missions and lost quite a few points, but unless you lose every single time and play endless hours, I doubt you could lose enough to lose a Hunter Rank. I don't know if its possible, but its possible to lose alot of points over a very long time period.

MH3 also has a built in level cap.

There are 5 ranks of quests: one to five stars. One being the easiest, five being the hardest. Once many of the quests are completed, an urgent quest becomes available and requires you to complete it before you can start doing two star quests. It also limits the user as the highest rank the player can attain is lvl 8. This may be the hardest part of the game; reaching a lvl cap, not being strong enough to complete the quest and no one of higher rank to help you complete the quest b/c they're on the next tier's quests. You may be doing other quests and gaining xp, but it won't level you above 8 as you didn't complete the quest.

That was me, the past 3-4 sessions (don't play every day, so it seems even longer), I couldn't for the love of Mike defeat a boss monster for a quest. Countless people were attempting the quest, but we couldn't defeat it b/c it had a huge stockpile of life and a charge attack which would cause instant death to nearly anyone with less than the strongest armor.

Last night I was so frustrated, my groups were so noobie that we were failing even the easy quests that should take no more than 10 minutes. We failed 4 straight quests, when finally i joined a game with 3 lvl 9+ characters and hoped they would help me on my quest. Except for one guy that looked like he was just gathering resources (very rude) , the other two helped me take down the boss. I thought it was time to log as it was nearing 2am, but one of the party members joined up for a 2star boss battle, something I couldn't do atleast for 4 more LONG levels. I joined up, but at that point it was only the two of us, I queued and told him I couldn't wait too long for 2 additional people. I did some stuff and when I came back we were in the instance with two incredibly strong players. We completed that quest and THEN 3 additional stronger boss quests and I say thank God I waited. As much fun as it is to learn a quest through failure, being competent and successful is much more fun =)