I was simply confused over the need for the side-bar text for the description of Gabal's School.
It took a couple of re-reads to put 2 and 2 together, is all. The PC's go to the school first in the early morning and only return later if they don't succeed at convincing Diogenes to let them in.
The confusion occurred because it states that, "When appropriate, this information should be conveyed to the party. Regardless of how events are resolved, the party witnesses a change outside the school as morning arrives."
When does that occur if they succeed in getting into the school in the first place?