Here's another application of the same mechanic in another context:
Now it's Player 2's turn, and the situation has been reversed, it is now Player 2 who is locked out of playing Entities because “Luffy” has a similar effect to “Knives” - He Conceals a Projected Entity (instead of Banishes like Knives). So let's say player 2 Projects and Manifests the Meme “Vanned”.
Player 2 proceeds to combat, and Directly Influences with their Meme "Vanned", doing -1 to Luffy (reducing its Will to 3), and then ends their turn.
Because Knives has been Transmuted into a Structure, it cannot conduct combat, because Structures do not conduct combat.