The thing is cars on a dealers lot are like a perishable item. They are paying financing fees on them for every day that they sit on their lot, so if you go in put a deposit on a car and then a week later say I don’t want it they have lost the ability to sell that car for a week to every Tom, Dick or Harry off the street. That is why they don’t want to refund the deposit. It sounds like hangyourcross is getting screwed though if the saleman told him the deposit was refundable, but they aren’t holding up to it.
Personally I’d go back to the dealership and start a huge arguement in the middle of the sales floor with the manager when there are other potential customers around.