It isn't very clear, but you have to click specifically on the text box to proceed in dialog. If you are using a steam deck you will need to use the touch screen.
I attempted it like 3 times but I couldn't see my cursor to try to do that, it was like still in normal gameplay mode and not menu mode. After I restarted my computer it stopped doing that and I was able to proceed but I was still a little confused at what I was supposed to do at first until I did see my mouse and realized I had to click the dialogue box. Been having a lot of fun hopping around since