Ask HN: Handling a dispute on Elance with an unrelenting client

I was awarded a job to work on Elance that involved Django. I gave an estimate of the cost & schedule of 24 days and started working on the project immediately based on a word document that had specifications. Looks like the guy who awarded me the job was a recruiting agency guy who did it for his client.

Within a couple of days of starting work, I was told that the project deadline will be 11 days which was a significant reduction. So I asked for more money to complete more work in less time and delivered code for the first 3 milestones and asked for the client to verify the code and release payment for the same. The client did release the payment for the milestones and I started working on milestone 4 when I found out that my work is dependent on the work of another freelancer who was also contracted to work on the same project. The rate of discussing with the project lead and completing work was dismally slow and I was down with fever for 4 days while working on the project. And when I wanted to stop working on the project, I requested the same and was persuaded to go further. More details were added to the work and involved a lot of UI and jQuery stuff which I had 0 expertise. So I asked out and there was no response except that I had to complete the project. So I cancelled the job and they asked their money back. Initially I refused saying that it was for the code already delivered, but they were yammering on and on about how my code is useless to them unless I finish the project. Fed up with it, I offered to do full refund provided they sign an NDA that they will not use my code in any project and provide me a receipt for the payment.

But the guy went and raised a dispute on Elance, wants my account suspended alongwith the refund without providing NDA. Now it is in the Elance mediation stage. How should I handle this? I have proof on the workroom for code submission and that he has released payment after verifying the milestone.