There's what Yann said, and also it happens arrDialog isn't usable.
I'm wondering in what layout you created it, it doesn't seem accessible.
Indeed, if I create a new array object, it appears as a layout object.
So create a new array object in layout 1, and tweak your code so it points this array instead of arrDialog.
Also, I'm not sure it is wise to use so many 0 opacity tiledbackground. Sprites should do the trick and be easier on the vram/CPU.
Finaly, for your own choice, you'd have to set it in the "next phase".
Atm, Phase1 displays "Press 'A' to agree press 'D' to disagree".
In phase 2 then, instead of "Space is pressed" you should have "A is pressed" and another subevent "D is pressed" and set the dialogs accordingly.
Edit: also I recommand the reading of this tutorial about framerate independence that will come in handy <img src="smileys/smiley2.gif" border="0" align="middle">