Trust your attorney's advice! If I were your agent, I would reply "I don't care what you are comfortable with, Mr. Buyer, but the seller is under no obligation to reimburse you for your inspection fee." They rolled the dice and chose to walk. They are out the $495, in my own opinion and I would hold fast to that.
I would indeed ask for a new release to be written. Have your agent write it up, you sign it and offer their deposit back and not a penny more.
Ask your attorney: why could this buyer put a lis pendens against your home? I have never heard of such nonsense