I started this quest and let Methredel get the diary first. I then stole it from the chest in her waterfront house but when I meet Armand at midnight to give him the diary, the only response I get from him is "Are you confused?".....somebody help! I've done practically everything I can think of and it will not let me join the thieves guild. I've done the entire game...well almost, can you ever really be done haha its the last thing I have to do and its bugging me!
I believe that you were supposed to pickpocket her (If she got to it 1st) to get it, if you let her go you lost. Idk what else to tell you, been a while since I played Oblivion.