I am a broker -associate and also an attorney with 22+ years experience practicing law.
Contacting the trustee and having him say it seems to be OK to carry on with the sale is setting yourself up for lots of trouble. What the trustee says to you verbally might not be what goes down on paper so never go with what one of those folks tell you.
Get a good real estate attorney that understands the ins and outs of Chapter 7 and how it affects a prospective buyer of a property like this.
Asking a Realtor what gives in this situation is as bad as talking to the trustee!
My inclination would be to walk from this piece of property and find one that isn't carrying any luggage.
I am not an attorney so do not consider this as legal advice, and you should consult with an attorney if you want legal advice. That said, I have an attorney in my staff and we do a large number of short sales...
The BK trustee never releases the property during the creditor meeting. What they probably do is make a determination that the property has no value to the BK Estate and then file a No Asset Report. This does not mean they release the property... If they gave the debtor indicating that it is OK for them to short sell the property this is technically not releasing the property as the BK Judge may have to approve it... the bank approving the short sale may be satisfied with this letter though...
You could probably get the seller to sign the deed, but the short sale department at the bank may or may not approve the short sale while the bankruptcy is still in process... they typically require Relief from Stay, which is a term that means permission from the Court (not the BK trustee) to proceed with the sale or enforcement with the lien.
Again, you should consult with an attorney if you want legal advise... I was just telling you my experience and I am not an attorney... I am a Real Estate Broker and not an attorney. Only an attorney can give you legal advice. Good luck!