Went back to a previous save last night and tried to play thru really fast with frequent saves to get back to the point of the bugged quest. I did a save right before initiating the quest, and tried going about it a couple different ways to see if I could proceeed. Nothing was working. It got really late though, and didn't get to try everything I wanted. It's not looking good though. I may have borked it over 40 gameplay hours ago.
I bought Morrowind for Xbox on its release day, and I don't recall it being this broken. There were a lot more "moving parts" to that game, too. I can't speak for Oblivion, since I didn't pick that game up until I got the PS3 a little over a year ago.
It's a mistake I make about once every six months. The buttons are right next to each other and look pretty much alike at a glance. Usually I catch it before somebody else does.