Thanks for all the input guys.

I guess bottom line is you need to make a decision on whether the benefit vs cost (emotional, time, monetary) of the client is favourable or not. If it's favourable, suck it up. If you're wasting a whole lot of resources on a client that is not producing benefits for your business, walk away.

Since this incident we have had a bunch of awesome clients (including Dave ) and other opportunities have presented themselves. You know what they say: "When one door closes, another one opens!"