I got the whole armor set, a zombie does 1 and a half hearts of damage, and I JUST attacked an iron golem and it brought me from 10 hearts to half a heart.
"battletowers-3.3.4-1.16.4"
This is the version I am on

Seems to be fixed from my testing in the next 1.17.1 update (not sure how/when I fixed it), but let me know if you encounter it again.

I also am having this problem. Mob damage isn't being reduced at all for some reason. I'm playing on the latest version of All The Fabric which also has battletowers-3.3.4-1.16.4. With key armor equipped a zombie does 1.25 damage, as opposed to diamond where the zombie does 0.25 damage.