I KNOW!!! I feel you pain. It becomes very frustrating to deal with this process, isn't it?? If your purchase is in MN, you may have signed a Short Sale Contingency Addendum as part of your purchase agreement. If so, it clearly states in there that if you should decide to walk away prior to the bank approval, you will receive your earnest money back, no harm, no foul.
What does your agent say?? Your agent should be able to advise you about these delicate matters. It's also important to make sure your expectations are realistic about how short sales go. Depending on the seller's lender, they can take a REALLY long time. I always advise buyers who are purchasing short sales to make their peace with the fact that it's going to be tough to hang in there.