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Right, just quick one.

Heralds in the Daemon Book give a Universal benefit to their unit when leading it.

If a character refuses a challenge and moves to the back of their Regiment (remember, if you refuse, the challenging player decides who retires, NOT the owning player).

Characters not fighting in the front rank do not give Ld bonuses or Magic Item bonuses to their unit.

However, Locus of Khorne/Nurgle/Tzeentch/Dave/Slaanesh are not Magic Items....ergo, if I choose to retire my opponents Herald, does the unit lose his benefit?

Why would the unit lose the benefit? The rule only requires the herald to be present in the unit, not in any particular place.

True, but you normally lose all benefits assosciated with a character when they specifically refuse a challenge.

We've been playing it that the Loci still works, I was just wondering if there was something we were over looking.

This is similar to the Eternal Guard and their special rules concerning characters in that unit. I would say that while the Herald is in the not (not leading it) the unit will still benefit from the Locus Rule.