How was the misunderstanding about Baba's attendance at the Udyapan ceremony finally cleared up for Dev?

The misunderstanding was resolved through a chain of communication. As described in Chapter 40, a disappointed Dev wrote a letter to his friend Jog, complaining that Baba had not kept his word. Jog then took this letter to Sai Baba in Shirdi and communicated Dev's feelings. In response, Baba revealed the truth, explaining that he had indeed attended in the guise of a Sanyasi with two others. Upon hearing this, Jog became joyful and immediately wrote a detailed letter back to Dev, relaying Baba's entire account. It was only upon reading Jog's letter that Dev understood the truth, and his doubt turned into remorse and love.