"so put my weapons away,"Calixto said something "I'll let you live"You just Yielded to him... Reload your charatcer and off him off.
If you happen to have a save during "Wait in Stone Qtr"
You can run over to Vendor/Smith Area (you'll often hear scream) and can procede as normal.
There are few other ways to kick start last section. Alot involve just killing him to find if quest will end, or if he is still essential.
If its Later, Then you might need to retalk to some NPC's, then go back to Stone Qtr to see if he shows up.
If you don't have a save back, You might wanna try to stealh kill him to aviod bounty. (or move your House Carl, since it likely they are reporting your crime)