Tokamak and Lithium "blankets" I am working on planning out nuclear fusion for a fictional world, and I am wondering if two ideas are able to work together, or if they contradict each other.
So Dueterium-Tritium fusion releases energy (approximately 17.6 MeV) alongside helium and a free neutron. But also, if a neutron hits Lithium, it would react and release Tritium, and this is useful for keeping a nuclear fusion reactor going. Thus one can place "blankets" of Lithium around a reactor to keep it going.
But does the manner in which a Tokamak, or similar magnetic confinement device, make it not function properly as the plasma is kept contained? Or would neutrons still escape, react with it, and allow it to continue the fusion reaction?
 A: The plasma state consists of charged particles that can undergo magnetic confinement.
But the neutrons, uncharged particles escape immediately from the plasma and will lose their energy of 14.06 Mev in the structural materials of the torus and in the Li blankets.
About 80% of the fusion power is transferred by these neutrons to the constituent media of the torus. This is where the thermal power must be captured.
Neutrons do not directly help to fusion nuclear reaction .
A: 
But does the manner in which a Tokamak, or similar magnetic
confinement device, make it not function properly as the plasma is
kept contained? Or would neutrons still escape, react with it, and
allow it to continue the fusion reaction?

Neutrons, being electrically neutral, are not subject to the magnetic forces keeping the fuel confined in the reactor. Even in ICF devices, which have huge densities, the neutrons easily escape.
Their energy will eventually be given up in scatterings off any atoms they come across. The simplest way to extract the energy for use is to surround the reactor in water. Neutrons scatter on the protons in the water, slow down, and causes the water to heat up. Same thing as in a fission reactor.
The blanket exists for other reasons. The easiest reaction for fusion is the D-T reaction. D we can extract from natural sources, T is not available. The lithium blanket is intended to solve this by reacting with some of the neutrons to produce T.
I say "intended" because we don't really know how to do this. We have some good ideas and lots of paper designs, but there is considerable uncertainty in many areas from the actual cross sections of the reactions to the practical issues of actually getting the T out of the Li. We're not even sure how we'll cool it - the energy formerly going into the water is now in the lithium, which is in turn often in some sort of solid matrix, and if we run water through it the T will be lost into the water (hydrogen leaks through everything).
