How was the misunderstanding between Dev and Sai Baba about the ceremony attendance ultimately resolved?

The misunderstanding was resolved through the intermediary, Jog. According to Chapter 40, after the ceremony, a confused and disappointed Dev wrote a letter to Jog, complaining that Baba had not kept his word. Jog then presented this letter and Dev's feelings to Sai Baba. Baba, in turn, explained that he had attended as a Sanyasi with two others, fulfilling his promise exactly. Jog, filled with joy, then wrote a detailed letter back to Dev explaining the entire account. Upon reading Jog's letter, Dev's eyes "overflowed with a surge of love," and he felt immense shame for having doubted Sai, finally understanding the truth.