How does the Locket and Meenlock interact?
I agree with some of the previous comments here. Not everything is going to have an official ruling and even in the back of the original Betrayal at House on The Hill rules book it says:


  ...if the rules are not specified in the rulebook you and your group can decide what makes the game most fun.


Personally, I would take it at face value. Since they have both cards, they must convert physical damage to mental damage and by proxy minus one to any mental damage taken.

That's my preference but if your group comes to any different agreement go with that instead. The important thing is to have fun.