I found that when I heard the Demon Dragon talk, I talked to Red, and after the bad ending which Drago destroy the world was triggered, even if I read the file to choose other options, he would default me to talk to Red,constantly triggering bad endings. Is this a bug?
Keep on choosing "Talk to Red and you will proceed on the next day for sure, the reason why you have to talk to the crocodile is that something is about to kill him and the only way to stop it was to be seen, and if you remember, the bear was still downstairs, and when he got out of Red's room, thats when the unknown entity snuck in and slowly taking the crocodile's life.