At a guess, you did not recruit Istar(image attached), the first dungeon boss. You need her in party for the cop to disappear. You MAY be able to salvage the game if you didn't kill her. She will reappear (maybe) in same room and you can try again. If you did kill her, you will have to restart from before you killed her to proceed.
Here is what is going on there: Her first demand is the death of the Dark Elf.
(Dark Elf can be found in Akihabara at the store.)
1. Refuse and she battles, then demands 5000 gp – no GP, she vanishes and you are blocked by cop. If you pay, all OK.
2. Say you'll go, contract Dark Elf, kick Istar's butt and with careful answers get her contract w/o paying. (save before each contact – tricky responses)
You really need to run this game through
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