Looking at different ways to represent different forms of "damage resistant", I got to looking at how you can add the Limited flaw to Immunity.Looking into the examples, limited damage resistance to a non-lethal form of damage would reduce the damage modifier by half before calculating the Toughness DC, or limited immunity to a form of lethal damage could downgrade it to non-lethal.

Here's the question: If I were to have Limited Immunity to non-lethal physical damage and Limited Immunity to lethal damage, using the above examples mentioned in the book, would the two stack, reducing a lethal damage attack to non-lethal and then reducing the damage modifier in half from the Limited Immunity to non-lethal damage?

The idea is to find a good way to represent what I believe would be a likely resistance to physical harm a hero/villain with liquid level Insubstantial may possess; not completely immune to physical harm (like the later levels of Insubstantial), but you'd need to hit it with something powerful to cause enough form disruption for real "damage". Tried using Impervious Protection, but ran into the awkward scenario of armor piercing rounds being able to harm a liquid level creature, when conceptually they should have been just as effective as standard bullets against such a being.

I found that in practice Limited Immunity + PL Rank Protection == Immunity, so I personally don't allow it in a build (because the total cost is so much less than pure immunity but give the same benefit).

Not sure how to build transforming lethal to non-lethal (typically nobody in my game was really at risk of dying from lethal).

One thing that could work is impervious protection plus regeneration to put your liquid body back together.  Sometimes the liquid or sand characters are inconvenienced by massive damage and have to pull themselves together.

That is more or less what I was going for, yes; bullets not doing much but explosives or other high impact blows would cause a level of disruption of form equivalent to injury (and of course, not having a similar level of protection for energy based attacks).

For the "lethal to non-lethal", that's actually stated in the book as an application of the Limited modifier on Immunity to Lethal Physical/Energy Damage; instead of being completely immune to that level of harm, you're so resistant that a bullet is likely to only cause a bruise as opposed to a hole, for example.

I'll look into your suggestion of "combining" protection and regeneration for the effect, though I found myself looking more at limited immunity because attacks with the penetrating modifier bypass a level of impervious which doesn't fit the feel of "liquid body resistance".