For the original error, it would be handy if you could send me ( simon dot jackson at red-gate dot com ) your logs from %LOCALAPPDATA%\\Red Gate\\Logs\\SQL Source Control 0 so i can have a dig round for what the original error was.
The functionality you need to recover (Telling source control the your object is the way you wish to resolve the conflict) is not implemented yet, but you should in theory be able to fake it out by hand so you can continue working.
One option would be to use TortoiseSVN (or you svn client of choice) to check out the whole scripts folder, then use SQL Compare to sync the live database to that folder and commit the changes manually (again using TortoiseSVN). You are aiming to make sure that the version in source control is the same as your live database ( so that the conflicts go away ).
If that's not possible than I have a few other options in mind.
you may also find that you need to unlink and re-link to the same place once you've done this, since there is a known issue with our recovery from SVN errors (SOC-138).