So I am now playing as young Joe, and I already knocked out the guard. However, I can't move to any side of the screen no matter what. I have tried restarting the game several times and reloading the save file, but the problem persists. Sometimes it also will show text so fast that I can't read it (a problem I have found on an off throughout the whole game, which always means I need to quit). Am I stuck forever? Will I need to start all over?

Wild guess: looks like somehow the character was placed on non-walkable area... Downfall was made with old AGS 2.7 - maybe you can try W98 / XP compatibility mode and play that scene again (I don't think you can fix the game after the bug happened)?

Not sure if I'm doing this right: I tried compatibility with Win98,XP Servive Pack 2, and XP Service Pack 3. No change. :( Looks like I'm gonna have to start all over.

I'll try that, thanks for the tips!

Have you been able to jump back to a slightly earlier save and progress through this part?