Piecing together the timelines, briefings, claims and counter claims I've come to believe this is what has happened:
Initially United approached Dortmund about Sancho and Zorc had the conversation with Woodward that Klaverkamp mentioned. In this conversation Dortmund laid out their conditions and gave United a deadline to respond. United did not get back to Dortmund. Dortmund, wondering what had happened, decided to extend the initial deadline by 10 days. United still do not respond. Effectively taking it as if they'd been ghosted on social media, Dortmund then broke off all contact with United. You can argue whether or not this was the 'grown up' thing to do. However, its the seller's prerogative if you want their asset.
Joining the dots, from the time Dortmund refused to talk any further to United intermediaries became the only channel through which any talks could happen. Similar to what happened with City and Napoli over Koulibaly. The people involved dislike each other so much that they won't talk directly. You can argue that United did not do anything to meet with this level of hostility. However, as Eckner said there are egos involved. We maybe didn't have enough background information on the personalities involved to know that they would respond so negatively?
What to make of the contradictory stories about agents fees and personal terms? Based on the initial reports from the German side, it seems there was belief Sancho would move and an attempt was made to paint him as a money grabbing mercenary. Journalists close to the agent however e.g. Di Marzio's team came out with the opposite narrative: there was no issue with terms and Sancho was more than happy to fit into United's wage structure.
When it became clear that an offer wasn't coming anytime soon the German side quickly settled down. In fact there was a clear reverse ferret: Sancho was now a good kid, grateful to Dortmund, happy to stay another year, not even thinking about going on strike. This is when the Manchester press pack started talking about agents fees. For whatever reason, someone at United decided to try and explain away the lack of progress in making a bid by piggybacking on the initial German reports. I am guessing United's strategy was to wear Dortmund down by showing there was nobody else in the race for Sancho and come in with a late bid as the only option. However, United may have overestimated how badly Dortmund want to sell Sancho this summer.
After that there was a whole lot of nothing. United sources clearly wanted to keep a degree of momentum behind the story so, after a while, the Manchester press pack got the terms agreed story. This was, of course, immediately contradicted by the sources close to the agents who remained adamant that terms have never been an issue. Notably, by this point, there had been a big change in attitude among the German press: The German media had pretty much stopped talking about any potential deal and were moving from amusement/confusion about United's approach to indifference.
Increasingly we started seeing English reporters saying that while Dortmund were privately saying they wouldn't sell they hadn't communicated this to United. IMO this can be almost entirely attributed to the fact that Dortmund are refusing to speak to United directly out of spite. In the meantime the agents and intermediaries kept up with the same message, which has been effectively: put €120m on the table and the deal can happen. This is not very surprising given that at least one of the intermediaries apparently represents the player himself and its clear the player wants to move. The agents will therefore keep the hope of a move alive for as long as possible. We've all seen Raiola playing these games with Pogba, none of us is naïve. Sancho likely isn't that sick and likely can play. However, Dortmund are now pretty much in he's staying mode so they're not going to get the German media to give him both barrels.
Which brings us to where we are now: Intermediaries trying to make the deal happen. Dortmund pretty much saying it won't happen and United's strategy of trying to drive down the price having seemingly failed.
Final thoughts: I imagine if €120m was offered Dortmund would accept, despite insisting they won't sell. Its a lot of money. I do not however expect United to offer this sum. So I can see why Dortmund are behaving as if the deal won't happen.
