Can't progress the quest "Tango with a Tracker" because of game crash.

[Alhanelem]

99% of the time, this is because of third-party tools. Disable them to proceed with the cutscene and I won't tell anyone if you put them back afterward. Such things very commonly cause crashes or softlocks in cutscenes.

In regards to not being able to obtain the replacement KI, as per wiki:

The item can only be acquired once per week (Conquest Tally) and it does not matter if a character is still holding the item from the week before, it is still possible to receive another one during the week after the old one is used.

When conquest resets, you will be able to obtain a new KI.

All the behavior you described is expected and normal aside from the crash itself. It's not a bug.

[jekasama]

Nope, still stuck. This is from the quest giver:

Pic edited with the temp. key items and quest window opened to show that I don't have the key item and the quest tracker shows the quest's name. Also you can see in the chatbox his current conversation text.

This is the one from the gully:

Shown here the dark miasma's text in the chatbox.

There's always a possibility that there's indeed something I'm missing (or using) however as far as my admittedly limited knowledge goes, and with GM's suggestion as posted in the original post, I still believe that this is a bug.

When conquest resets, you will be able to obtain a new KI.

This is what I hope and that it will resolve itself. Until it resets, however, there's nothing comes to mind to fix it from my end.

Original post edited for extra clarity.