Arcane decoy doesn't block dispel, its just guaranteed to be taken. If only one spell would go, its 1701, but if 4 would go, 1701 only saves one of them and you lose the other 3.

A critter special ability might be coded to bypass it, but a critter cast 530 would take it as one of the spells removed, just as happened to you.

Its the difference between dispel (417) and disjunction (530). 417 takes one spell which will always be decoy, 530 takes lots, of which only one will be decoy.

The Illoke used 530 (or a similar critter power, Illoke do various things which look like spells but which are actually critter special abilities) so you lost lots of spells, one of which was decoy.

As you get higher in level, you get the higher level spells thrown at you, so you'll be seeing rather more of disjunction/abolition rather than dispel in future.

Decoy is top quality dispel fodder, but there's value in wearing other non-critical spells too, now that you've reached the level where the mass dispels get thrown at you.