Originally Posted by TombRaiser
Maybe it's a glitch on PS3. I've not heard of this issue before.
I say go and kill them all, because you will break your cover anyway once you retrieve the last book, and you'll have to kill everyone anyways to escape.
Figured it out. Before I got to the cave I found one of those stones/artifact type things that you can activate. I activated it and it gave me the Daedra dagger/gauntlets. So when I would attempt to give the dude all my items, it won't let you remove the gauntlets. It had to be what was causing the game to freeze, because I waited an hour for the affect or wear off, and it worked just fine.
I did end up going in and killing everyone, fun times. I almost saved the lizard guy, but he kept running too far ahead of me and he finally got cornered by like 6 of the guys hahaha. Oh well.