Arizona State Championship - How did I get myself into this mess?

[DesertCat]

I had just been moved to the table. The blinds are now 1500-3000 100 ante. Everyone is new to me, and I'm one of the shorter stacks. After a couple hands it seems very TAG, raise and everyone folds. My first playable hand everyone folds to me on the button and I raise to 9k with 97s, and win the blinds, which gets me to 38k.

Very next hand it's folded to me in the CO and I have AdQd. Again I make it 9k. The SB, a jovial old man says you aren't going to raise again? Button folds then he checks his cards, and suddenly smiles. He calls, leaving him around 25k left.

Flop is 853, one diamond. He thinks for a while and bets 5k. I think about pushing but I can't, I know he has the best hand and I have trouble bluffing someone who appears to be unbluffable. I consider folding and showing, but that strikes me as way too weak. I decide he's giving me great drawing odds, so I call.

Turn is a Ten that isn't a diamond. He checks. What do you do? And should I have played the flop differently?