I had a similar problem where nothing happened as the NPC's spoke in that same stage of the quest. I stood there for almost 10 minutes until I jumped down to the first floor and a quest update headline appeared which told me to talk to the Khajit npc. Try that or just walk outside the building and back in see if it helps!
sweetsapling wrote: »I'm stuck too. I can only ask the Khajit what to do now; and he answers: "What we all do..." I don't even have a questline for them anymore, so i can't cancel and retry.
I can only take the first skill, as skill is not even 2!
I'm lvl 48 and have finished the mage- and warrior-questlines with no problems.