When I got stuck at that part during the quest, I ad a similar problem. I couldn't figure out what to do next, since all the chat conversations were seemingly dead ends. It turned out the problem was that, while talking to evil Dave, I continuously clicked past a screen with chat options, thinking that the screen was filled with his dialogue. Go very slow through the conversation, and look carefully at every screen. If this isn't the problem, then the only advice I can give you is to start the sub-quest over, and pay close attention to the quest guide.