It's been a long, long time since I did these quests, but if I recall correctly the feeling was that the Crystal Tower was the greater concern and needed to be dealt with pronto. Nero's help would get the job done much more quickly and so for the time being an uneasy truce was established. And, of course, when it was over, we lost track of Nero when he became corrupted by the darkness, and so couldn't haul him in once the truce had ended.

This kinda thing crops up in fiction all the time; good guys temporarily allying with bad guys when their interests happen to coincide. You're certainly entitled to the opinion that it wasn't handled very gracefully in this case, but I'm pretty sure that's what the writers were aiming for. Yeah, Nero is a bad guy, but in dealing with the Crystal Tower he was a USEFUL bad guy, and so we set aside our differences... for now.