This is actually something that predatory studios do, and artists have to keep their guard up to protect themselves from it.

This guy has probably dealt with that situation before, and for whatever reason, apparently your correspondence triggered his pattern detector and got his guard up.

Not saying this guy is/was worth it (or not), is it possible that the timeline wasn't clearly communicated from the start?

If you would

a) agree on a timeline from the start (1. create test piece, 2. Assess test piece and negotiate contract, 3. Finalize Design Brief, ..)

b) draw clearer outlines on what you can or cannot do with the test piece (if the piece wasn't payed for, make it clear you will not use it for anything else than assessing his skills)

c) pay a small fee for the test piece (just to make sure the artist isn't getting the wrong impression... yes, some might take the money and run, some might deliver shitty quality for the money, hence I would negotiate a reduced rate, and then write the money off as a sign of goodwill towards candidates).

you might be able to evade your potential artists getting the wrong impression.

I don't think this particular guy/gal showed any sign of professionality in how he conducts his negotiations. IF he got the impression that you where trying to trick him, he should have talked about it, but in a professional manner. You CAN treat such touchy subjects as a professional (just as you did in your e-mail conversation).

In the end, you always have to take the risk with people, again and again. Somebody who seemed to be a very skillfull and motivated artist might turn out to be a lazy bum... just as in turn, somebody who is not selling himself very well might be an awesome artist.

I think you did the right thing. Good luck finding a better candidate.