A1: When you're in the house you just run around and bash stray dog with whatever weapon you have. hit him a few times then run away, run back and hit him some more run away until you defeat him. then once it goes to the cutscene outside and you start your second battle with him, you can either defeat him just like you did while you were inside by running away, coming back, beating him to death with your weapon and running away again. if you defeat him that way you get the bad ending.

to get the good ending when he sits down on the ground and starts saying"i'm sorry, Joshua.." or whatever it is he says, you run up close to him, then pause and go in your items menu, instead of equipping gregory's gun as your weapon, click "use" instead and it will start a another cutscene. this is the good ending... very sad, but its the good ending. you get some pretty cool items in the four leaf clover room if you end this way.