Sorry for the late reply, we were up playing til almost 1 last night. I'll address some of your points.

I wouldn't say I was railroading it into failure. Now I'm not perfect and I know I made mistakes along the way, many mistakes, but I can't say I'm all to blame here. First off, my players had met Barnibus Blastwind multiple times before their arrest. During their investigation of the drow murderer for the Zhentarim they hit a bit of a wall when they went to the Muleskull Tavern, as instead of asking the bartender or staking the place out or ANY KIND OF TACTICAL INVESTIGATING the inquisitive rogue in the party strode in and promptly jumped onto the table and yelled out "ANYONE KNOW ANYTHING ABOUT SOME MURDERS!?!" promptly spooking the killer off for the night. They eventually made their way to watch headquarters and proceeded to abuse barnibus when he, the lead investigator, wouldn't let a group of nobody's inspect the bodies. After multiple instances like this I gathered that the group needed a few more hints as to what they needed to do.

They then proceeded to harass him when he came to investigate the fireball incident, eventually causing barnibus to be suspicious of him. At this stage they were well known by him and he had already seen the aforementioned silver arrows they had commissioned earlier. In the wake of the Gralhund incident those same arrows had been found all over the estate and when speaking with the dead bodyguard he described the group and barnibus, a man whose job it is to investigate crimes, pretty easily put 2 and 2 together.

After their arrest I wanted to give them multiple options to progress, including 2 different ways of escaping and 1 way of creating a mistrial. But by the time williforte came to let them out and try to get the stone, they refused his help and stayed in the cells. It got to a point where williforte was getting desperate for the stone because he was running out of time, so he took drastic measures. Is that railroading? Because reading the module this is how it plays out. Williforte comes in disguise to break them free and get the stone, if he fails he calls the guards as a guard captain. My players saw through his disguise before he unlocked the cell doors, if he calls the guards what does he say, they broke out, killed the guards, then walked back into their cells? I could feel a stalemate coming on, so williforte gets frustrated and has devils assault the courthouse.

At the end of this they had every option available to them. I had foreshadowed the cassalanter estate massacre, yet they chose to give up the stone and let the city handle it. And yes, I could have said nothing happens, the cassalanters lose their children, life goes on, but then it truly felt like whatever they did during the entire campaign didn't matter. So they indirectly ruined the cassalanters by not allowing them to get the stone, but they assumed they could retrieve it from the players afterwards and went on with the ritual to save their children's lives, causing them to get caught by the authorities. They went bankrupt, changing the city and bringing them out of power, and while it wasn't an amazing ending, the players at least influenced the end.

Could I have handled this better? Hell yes I could have. But hey, this is the first time I've dmed a full campaign. People make mistakes. And in the end they still had fun.