I have the latest v160. I slept with the prostitute as the red prince, she turned into the princess and all that, then I woke up but didn't get attacked by anyone, talked to Lavrik again and he ended the conversion. That's it, the quest doesn't go anywhere and remains unfinished.
A bunch of people on the wiki quest page reported the same issue.
http://divinityoriginalsin2.wiki.fextralife.com/Love+Has+a+Price Don't even fix the quest, just erase it cuz it's stupid.
