This bug also happened to me during my first playthrough in the new version. I believe it happens because during the quest, I failed to get the beast's head. Check your inventory if it happened to you as well.
Viewing post in Knightly Passions 0.37! RELEASE! comments
It was in my inventory when I attempted to turn in. There was a similar issue in version 0.36 where when you tried to turn in the golem head, the entire scene would play normally, but when the arms trader went to go to bed and you were supposed to leave her house, all UI elements vanished and you were left staring at the blurry background image of her house with no way to do anything except reload a previous save.