Madoka screwed up the reset or something along those lines, leaving Homura with two contracts, and two sets of powers. Her old Time powers, and whatever her Wraith-timeline self wished for, the one that gives her a bow like Madoka. Somehow, some wraiths managed to get a chunk of Homura's shield, if i recall, which operates under 'previous universe metaphysics', corrupting the Wraiths and giving them a bit of time magic while also theming them after the Mitakihara meguca. I honestly don't remember much more than 'the Madoka themed Wraith teams up with Homura to defeat the other corrupted Wraiths', Wraith Arc was a really, really bad attempt to tie end-of-anime to start-of-Rebellion. It also ends with the Kyubey somehow managing to retain that shield fragment during the end-of-Wraith-Arc cosmic reset, which is why he's even willing to start the whole 'bring back Witches' plan that led to Rebellion.
Mostly this, but slight correction. Spoilers for Wraith Arc below.
At the end of the anime, when Ultimate Madoka resets the universe after the destroying the newly hatched Krimhield Gretchen just ate the planet earth, she bids farewell to Homura as the erasure of her witch paradoxes her out of existence.
Kyubey is present but states that he won't be retaining the memory of the previous universe, as it is rearranging events so as Witches and the events they caused never happened. Madoka and her existence also included, as she becomes a fundamental force/principle of the universe to do her work.
Homura is now understandably horrified at the idea of returning to earth without Madoka or any memory of her. I'm not quite sure how exactly it happened, but Homura came out of it with a new wish: to not forget her memories of Madoka. Which upon her return manifested in the ability to use Madoka-themed Bow and Memory Manipulation.
Wraith Arc is her trying to cope with living in a world without Madoka, and failing miserably. She gets reckless which, as a post above said, accidentally got a chunk of her potential/soul taken by a Wraith.
Said wraith eventually ended up getting jacked by Homura's potential (apparently it's sapient enough to do that) and took the form of Madoka, becoming an ally for the rest of the arc.
Anyway, the lost potential diminished Homura's ability to use magic. She could still transform but couldn't summon her weapons, and her magical abilities a took a nosedive. Kyubey says her soul was partially gone, operating at a lower maximum capacity, and couldn't regenerate.
This is literally what Ashtaroth did to her. She subsumed a part of Homura's soul, though to what extent, it's not sure.
Either way Homura is in for a Bad Time if she can't summon her shield as it has all her weaponry and the diminished magic capacity is outright crippling given she could only access the low magic potential she started with in the first place.
Ashtaroth, once she gets rolling, is on the way to becoming a nightmare of a witch that could potentially match/surpass Walpurgisnacht, because she has both Madoka's and Walpy's methods of accumulating power. She stacks potential and absorbs other magical entities as she goes.
She ain't much right now, but if given a decent amount of time and opportunity? Yikes.
This is developing into an Isabeau-esque problem Kyubey would need drastic solutions to, but given that he can't follow them across timelines? He can't even try.