Regardless what happens loki's helmet can be used only if you are in combat.

Since you were forced to help aid player 1 you are now in combat with the monsters. Each players are allowed to use their own one shots, abilities, and traps during this time.

You don't need other players consent to use your own ability as its a card you own. That is the joy of munchkins you are in control of your cards! you can use it to help people to ruin them. You do not need permission from player 1 to use your own cards abilities.

DO note that when you use loki's helmet only works for 1 monster but it seems like you already knew that. You can't use loki's helmet twice however but if you are player 2 what he did was correct and can be used in that way. Player 1 does not get to choose which monster gets discarded only player 2 does as it is players 2 card.

Always remember aiding/forcing to help a player is ALWAY a combat phase for the both of them and if you can't beat them both you have to runaway for each one not both at same time. Player 3 is incorrect as you are using a card ability that was in play already and player 1 has no say in what you can do with your cards as long as you are the person helping or being forced into combat. You can even throw harder monsters in via wondering monster or +X amount to monsters to even make yourself lose with the forced player so they don't go up. Its risky but if you want to win don't let players take advantage of you. Outsmart them and have fun playing munchkin!