I messed up during the DB quest to find the Gourmet and someone saw me kill a guy.

Quite a bit of time has passed.

Now I'm on the Thieves Guild quust to talk to a guy in Markarth. Upon entry, I'm approached by guards and given the whole spiel about conspiring against Markarth and given the option to persuade, bribe, intimidate, or surrender. None of these options work.

Is this quest borked for me, or am I missing something?

Have you finished the forsworn Conspirocy? if so its a bugged quest that causes the guards to go into a glicthed loop if you get caught commiting a crime in the city. there is a fix. Go to the Temple of Talos there will be 3 guards inside, 2 will attack you and one will talk to you do not attack any of them. Engage in the conversation with the one who talks to you. Tell him he is Corrupt follow the dialog, talk to him again it will give you the option to pay off you fine as long as you have to gold in you inventory to do so.

Edit:

Here is the exact fix for both the PC and Xbox/PS3

Helping Madanach escape may trigger all the guards to constantly chase the Dragonborn wanting to arrest them, even long after the quest (it can also occur if the Dragonborn commits a crime in Markarth and reaches a high bounty). There is a solution to this by opening your console and setting all 3 factions that rule Markarth back to 0 fine. Codes being, player.setcrimegold 0 00018aac, player.setcrimegold 0 0008e764, player.setcrimegold 0 0002816c. this also affects Xbox 360 and PS3. To fix on Xbox and PS3, make sure your level is high enough and enter Markarth. Upon entering the city, do not have any guards spot you, and enter the Shrine of Talos. The three guards from the previous quest "The Forsworn Conspiracy," will still be there, and the middle guard will engage in the same conversation as at the end of that quest. The other two guards will attack you, and because you are in conversation, there is no way to fight back, so be prepared. Answer the guard with "You're corrupt, Thonar is paying you," and then again with "Fine, I'll come quietly." The guard will then do nothing, so heal yourself. After a few seconds, the same guard will attempt to arrest you, and give you the option to pay off your bounty.

I killed Madanach during the escape and even got a pat on the back from the Silver Bloods.

I just don't get it.

Thanks. I had an Argonian assassin and it drove up the walls that loop. Next time something happens like this. I will remember this/

Anyone tried Sean1977's solution? Seems like the most reasonable one I've found so far on the internet - and I've had this bug for a long, LONG time without any hope of fixing it!

I will try it later although I am concerned about the amount of guards that will chase me into the Temple of Talos (I play on PS3 so I don't have the options of resetting my fines).