dnd 5e – Player misunderstood NPC, now misrepresenting quest goals to rest of party

Overview:
One of my players had a conversation with an NPC in a language no other character or player was in on, and now the player’s misunderstanding of what was said is making a simple side quest much more time consuming and convoluted than it needs to be. It was supposed to be one session, but now it’s going into its fourth session and probably won’t wrap up anytime soon at this current rate.

I want this dungeon side quest wrapped up so we can return to the main quest, and I don’t want my players to feel like they’ve wasted their time on this quest. Should I correct the misunderstanding so as not to waste everyone’s time and energy, or should I let them follow through with this much longer approach based on a misunderstanding, and then potentially upset them when they learn they’ve put lots more time and energy into a quest that the current pacifist approach wouldn’t realistically solve?

Details:
My players are in a dungeon on a side quest that was supposed to be a short breather away from the main quest and an opportunity to get the party some gold to spend—a simple premise with minimal writing. Lizardfolk inhabit the dungeon, and locals want them gone and are willing to pay the party for it.

I will note right now that these lizardfolk are hostile to any non-lizardfolk and are not trusting enough to enter diplomacy, due to years of lizardfolk and softskins hunting each other in the region. However, I do know Volo’s Guide to Monsters describes lizardfolk as potentially allying with other races out of pragmatism.

As soon as the party encountered their first patrolling lizardfolk guards, the bard, who speaks Draconic, used disguise self to take on the appearance of a lizardfolk. She began speaking with the closest guard while the rest of the group hid nearby.

Due to the language barrier and the fact that most of the players were hiding nearby, I used Roll20’s whisper chat function so that the players wouldn’t all know what the enemy monster was saying and let it influence their decisions. Here’s a partial transcript of what I wrote for the lizardfolk’s dialogue (possibly a tad more intelligent than what the stat block reflects) and my best recollections summarizing the player’s verbal responses:

Guard: I’ve been thinking about the shaman. Did you have any thoughts on that? (Note: this is the first mention of the tribe’s leadership.)

(Player claims she tries not to think too much about such things.)

Guard: Good. Thinking is dangerous. Care to help me with the meat?

(Player dodges the question and says she wants to tell the guard something but “can’t say it.”)

Guard: You…want to tell me something without saying it? That is illogical.

(Player claims it’s a secret.)

Guard: No secrets in the tribe.

(Player says she can’t say it here because she’s embarrassed.)

Lizardfolk guard: What is ’embarrassed’?

(Player dodges the question and tries to get the guard to leave his post.)

Guard: I am on duty.

(Player insists and tries to get the guard to approach her.)

Guard: YOU come over HERE.

A second lizardfolk guard approaches.

Second guard: Problem here?

First guard, to the player: You’re acting strangely. Please report to the shaman at once for assessment.

(I don’t remember what anyone said or did right here, but I had the lizardfolk roll a Perception check, which they scored highly on.)

First guard: A test is in order. What is our shaman’s name?

(Player freezes up and can’t provide an answer.)

Second guard: I deduce that this one is an impostor!

First guard: IMPOSTOR! ATTACK!

Then I had the party roll initiative. The disguised player happened to be first in the order and spent her turn desperately trying to continue diplomacy, bringing up the group that wants the lizardfolk gone.

First guard: The other tribes are our enemies! They feast on us as we feast on them!

(Player fails a Persuasion check attempting to get the guards to act as diplomats.)

First guard: It is against the Tribal Code for private individuals to engage in diplomacy. Our role is vigilance and border security!

(Player’s overly long turn ends. Lizardfolk happened to roll high initiative as well, so no other players have popped out of hiding yet.)

First guard: Don’t resist.

Both guards attack the disguised player. The other players come out of hiding and overpower the two guards.

From this point onward, the player whose character was using disguise self and speaking with the two lizardfolk keeps telling the other players that there’s a chance for diplomacy and that the guards were just going to arrest her and take her to the shaman.

Before they knew she was an impostor, the lizardfolk said she was acting strangely and told her to report to the shaman for assessment, and after they concluded she was an impostor, they attacked while telling her not to resist. I meant the “Don’t resist” line to be a taunt, like “Don’t bother getting up” or “Resistance is futile” or “Just let it happen.” But the player took “Don’t resist” and a flurry of attacks with spiked clubs and spiked shields as…arrest? And this is right on the heels of “IMPOSTOR! ATTACK!”, a mention of eating and being eaten by the locals, and a blatant rejection of diplomacy.

So now the players are performing Medicine checks to stabilize every lizardfolk they defeat, and the lizardfolk are attacking them on sight as they push deeper into the dungeon. They’re dragging the unconscious bodies back to a room where they currently have seven unconscious lizardfolk piled up. And the party has been led to believe that diplomacy has a real chance here.

As of this writing we’re between our third and fourth sessions in this dungeon, and most of it still lies ahead.

To reiterate the question as stated in the overview, should I allow the “diplomat” to keep leading them astray for however many sessions on this basic dungeon-delving side quest, only to have diplomacy fail in the end (the two sides have been hunting and eating each other for years and the lizardfolk just see non-lizardfolk as food and invaders), or should I just let the players all know what was actually said in the conversation?