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Chapter 1: The Little Shop of Dreams

I went and talked to the shopkeeper to close his shop and convinced him successfully, but the moment the conversation is over, a black screen shows up. I tried various dialog options & a combination of options, but everytime a black screen appears.

While the black screen is present, I'm able to move my character around (WASD) and can use my sword too. I played around with the sword, guards reacted to it & killed me.. it was only when the game was over that the black screen went away.

I even tried pressing F5 to save the game while the black screen was up, tried reducing graphics quality to low settings, tried running the game in windowed mode, tried restarting the game several times, tried reloading older save games, but nothing helped.

I did this quest after the Scent of Incence quest. I dont know if that has anything to do with it, as they were both related to the same shopkeeper.

Did anyone else also have a similar problem, or is it just me?

Laptop Specs: Win 7 64bit, i7 740QM Processor, 8GB DDR3 RAM, 1GB ATi Mobility Radeon HD5870
This question / problem has been solved by Inkerimage
Exact same problem here. Sound keeps playing, but screen is black and game can only be exited by killing the process. Would love to see a workaround for this, as I'd like to finish this quest before proceeding with the storyline.

I'm also on Win7-64, but with a Nvidia GTX 285 (so ATI is not to blame).
Same thing here, Intel core i7 920 win7 x64 ATI 5870.
If you can find a door to get through, i.e., enter a building, the screen comes back. Then when you go back outside everything's back to normal. But the quest won't register as completed or anything. Even if you tell him you believe him and you aren't going to worry about it nothing happens. I think the quest is just completely broken.

I wonder if there's supposed to be a cutscene after you tell him to close it down, with the townspeople coming up to you, but it just never goes. I tried after Scent of Incense as well.
I had this problem as well but managed to complete it without the glitch by doing this:

First I acquired the Scent of Incense quest then I acquired the Little Shop of Dreams quest. Then I talked to the shopkeeper and first got him to give me the recipe then intimidated him into leaving all in the same conversation. Then I got my reward for getting him to shut down his store and went on to complete the Scent of Incense quest with no issues.

It's not a perfect fix, but it seems to be a decent workaround if you know about it before taking on these 2 quests.
I am also with x64 windows 7 nvidia GTS 450 video card. When the screen went blank just turn off and on the monitor and all is back to normal.
Had the same today, not even related to a quest. Was looting a house in act 1, after opening the door to the street again everything went black. music still played. I could ctrl+alt+del out of it but the screen resolution in windows got bogged up and my mouse was gone forever (ever after reconnecting it the mouse did not work). In the end a hard reset solved the issue.