The name of the thread says it all. I was testing out some stuff, and I happened to lose my Magic Shield to a Like Like. When I was wandering around the forest, the Moblin arrows were penetrating my shield, and Octoroks yielded the same result. Before I'd been eaten and before I had a Magic Shield at all, I had blocked some Goriya boomerangs so I don't think the Small Shield is completely broken. Link was still carrying the Small Shield so it's clearly a bug. The quest I was testing it on was originally built in 2.11 beta 6 if that's a factor.
Small shield disfunctional after losing Magic Shield(b192)
There is a new quest rule: Like Likes eat small shields. Do you have that rule checked? It's possible that if you have it checked your small shield was also taken but you don't have the sprites that show Link without a shield so even though you can see it, he really doesn't have it.
When the rule "can keep old items" was unchecked, everything was the same for me like for Amazing Ampharos. However, when I checked it, the shield worked fine. So, the likelikes eat all shields without this rule, but since there are no shieldless Link sprites by default, it won't show that Link lost his shield.
Also, the rule "like likes eat small shields" rule was unchecked for me, so I don't know if this is a bug... This certainly worked other way in earlier versions, but it can be that it needs to work this way in the newer versions.
EDIT: I am with Windows XP.
I would say this is a bug. It did the same for me too. And the rule Like Likes eat all shields was not checked.
Is it possible that the quest rule is broken? You never know.....
The quest rules I had checked were:
Solid Blocks
Must Defeat All Bosses
Items Disappear When Held Up
Those were the only ones, and I don't think any of them have any bearing on the small shield.
Similarly, I tried getting eaten by a Like Like when I didn't have a Magic Shield, and after breaking free, I was still able to block Moblin arrows. It doesn't make sense that you can only lose small shield abilities after getting a Magic Shield, and the old item rule probably shouldn't be needed for the small shield given its NES status.
Rest assured that the Like Like equipment devouring mechanism is being reworked in adherence to greater enemy customisation. So, I'll consider this "being treated".