Acolyte's Reward

As Acolyte's Reward tries to resolve, if only the first target is illegal, Acolyte's Reward won't prevent any damage that would be dealt to that creature and, because of this, Acolyte's Reward won't deal damage to the second target. If only the second target is illegal, damage that would be dealt to the first target will be prevented, but Acolyte's Reward won't deal damage. If both targets are illegal, Acolyte's Reward won't resolve.

If the first target would be dealt combat damage by multiple creatures, you choose which of that damage to prevent. (For example, if one of those creatures has deathtouch, you could choose to prevent the damage from that creature specifically.) You don't decide until the point at which the creatures would deal their damage.

Acolyte's Reward has two targets: the creature that would be dealt damage and the permanent or player that Acolyte's Reward will deal damage to. These targets are chosen as you cast Acolyte's Reward.

If the amount of damage that would be dealt to the first target is in excess of the amount of damage that Acolyte's Reward would prevent, the source deals its excess damage to the first target at the same time that the rest of it is prevented. Then Acolyte's Reward deals its damage.

The damage will be dealt by Acolyte's Reward as it existed on the stack, not as it exists when the damage is dealt. That is, it's an instant spell that's dealing the damage, in case an ability cares about that (such as Satyr Firedancer's, which includes the phrase "Whenever an instant or sorcery spell you control deals damage to an opponent").

You don't choose a source of damage. The prevention shield will apply to the next X damage that would be dealt to the first target, no matter where that damage comes from. It also doesn't matter whether the damage is dealt at the same time. For example, if the shield prevents the next 5 damage to the first target, and that creature would be dealt 3 damage by Lightning Strike, that 3 damage is prevented and Acolyte's Reward deals 3 damage to the second target. The prevention effect will still apply to the next 2 damage the first target would be dealt that turn.