I think the started being a problem within the last month, but perhaps it was longer and I didn't notice. The issue is that I have "Verbatim mode" on by default in my account settings for Kagi search. I think you changed something so that Kagi Assistant uses the filtering rules that the user has set, and inadvertently also started using the default Verbatim setting.
Because the Assistant's searches are very loose and broad (with lots of synonyms and variations) this means that Verbatim searches very often fail to return any results. The Assistant then replies with a canned phrase "Search isn't returning anything useful" before trying to proceed without search. Or worse, it gets a very small number of results which get unduly weighted in the answer.
I suspected this was the case, so I just had a session where I tested what happened when I turned "Verbatim mode" on and off several times during the session while telling the Assistant what I was doing. Here's its conclusion:
Under verbatim mode, queries containing function-word/stopword-like tokens ("vs") plus multiple domain-specific terms return zero results or a single irrelevant generic article, while the same intent rephrased returns multiple relevant results — and the identical queries succeed with verbatim off. Verbatim mode appears to (a) treat tokens like "vs" as required literal terms, and (b) lack the relaxation fallback that non-verbatim mode uses for over-constrained queries.
I expected the Assistant to perform searches that work regardless of the default setting for Verbatim mode. Probably the easiest solution is for the Assistant to ignore the default and always force non-verbatim search.
To reproduce, use a test account where you set Verbatim mode to yes. Ask some relatively complex question within the assistant that requires web search. Note that the results are terrible. Then, while in the same session, go to settings and turn Verbatim mode off. Ask the Assistant to retry the search. Note that it works.