The answer to your question is... both.
It's the amount of XP loss which varies:
Death While Recovery:
...still satiated from the recent devouring of the elf's soul, the Soul Mother relished a second helping and consumed Arendir's foundation once more...
- If you have not recovered from your last death before you die again and you respawn you will lose 5% of the XP it takes to level up at your level.
- If you have not recovered from your last death before you die again and you have Raise Dead cast upon you, you will lose 3% of the XP it takes to level up at your level.
- If you have not recovered from your last death before you die again and you have Resurrection cast upon you, you will lose 1% of the XP it takes to level up at your level.
Three Deaths:
...the continued and repeating anguish of death over such a short span of time caused Sordarir to lose a part of his being...
- If you die 3 times in Your PC Level * 15 minutes, you will force respawn and lose 10% of the XP needed to level.
For example if a level 12 dies 3 times in 180 (12 times 15) minutes, he will lose 32,000xp (10% of 320,000) and forcibly respawn.
- If you are forced to respawn, your window is reset.
- Levelling does not reset the window, nor does it reset the number of deaths.