Talking to the Sheriff is actually optional, all it does is add a bit more context to the story. You don’t need to talk to him to progress the game, you can complete the game without ever talking to him.
I just played through the quests until obtaining the knife, and at that point I was still able to talk to the sheriff, so I’m not sure I’m able to reproduce the blocker you’re describing.
As a hint, obtaining the knife allows you to access a new area where you can collect another item. If that doesn’t help, please feel free to email me with more info on the problem you’re running into!
Jordanstephensen@gmail.com