That's the actual problem I think. Imo it's fine for them to try to flirt with you, but almost all the non flirt options in those situations are kind of mean. There are also some options were I'm just not sure if I am being nice or starting down the relationship path.

Is this hug going to comfort them or is it already sexual? I don't know. Which is all the more hard for me because I'm playing a kind old dwarfen paladin who just wants everyone to get along and be happy.