I didn't want to let go of my stuff so i took the more direct approach and told them exactly who i was.
I can't answer your question, Aelia, but i will say it'd be par for the course if you can only advance along the non-violent path for so long. Bethesda obviously hasn't thought of too many different gaming approaches and has really only balanced the game for combat. What are your options here? Confront them head on - the righteous path. Play along until your cover's blown - the not so bold but also not so silly approach. Sacrifice the prisoner - the evil path. The first two end in combat and, without spoiling, i'm guessing the third will too. At times like this, an archive save is called for.