This short story centers around a virtual reality type game in which the protagonists are hunting a vampire in a medieval setting. The game doesn't go well for most of the story, but the protagonists win after the noob character shoots the vampire with a silver dagger fired from his crossbow. I believe also that the vampire ended up being the jester type character who had joined their party early on.
Could it be "Werewolves of Luna" by R. Garcia Y. Robertson? The story features a group of people and one alien in a virtual reality game where they have to steal a ruby from a vampire's castle. I don't have my copy at hand, but I remember it was a very convoluted plot, beginning with the main character stranded on the moon running out of oxygen and being drafted into the game, and one player is a doglike alien that insists on playing as a werewolf (hence the title).
It was collected in "The Moon Maid and Other Fantastic Adventures" (1998, ISBN 0965590186) and first published in Asimov's Science Fiction in 1994.