Karlach act 1 post goblin leaders

Ive just finished fighting the goblin leaders and have collected the infernal iron. my problem is that now that I have it I want to fix karlach, but dammon will only thank me for killing the goblins and the only option is to access his shop.

I want to romance karlach on this run and this is kinda annoying, is this a thing with the tieflings starting to leave the grove or bug?