I have tried to complete this quest, and after I win the fight, it just goes back to where it was before the fight. I fought 5 times, and it happens every time. I don't know what to do to complete this, and I have fulfilled all the requirements. My Crane Student would really like to become a Disciple!!!
I wondered about this too. I had to complete the fight twice before the quest completed - the first time it did exactly as you described and returned me to having to talk to the guy again. The second time I spoke with him I'm sure the dialog was slightly different from the first.
I wonder whether there is some hidden condition that has to be met for the fight to be considered a success in this instance? Maybe the crane has to maintain a certain level of health or something, in order to prove his worth.