Take a step back from the project and develop a contract, stipulating how the relationship should move forward that is both functional and beneficial to each party. Reestablish the relationship and understand it may mean losing the job but retaining your sanity. As a designer your job is twofold, first to create an enviroment for creative pursuit in conjunction with your client and also to create meaningful work. Think of yourself as an advisor and your client is paying you to help them make wise decision, not your fault if they dont choose your advice. Create a contract it creates the framework for a relationship. Also no when to drop a client no matter how great he job is.