11:30 is rather late in the day to have work done same day, even if it is just a diagnosis. The shop likely opens at 7:00 a.m. and cars are probably lined up as early as 6:30 a.m. Then you have to imagine getting the car pulled around to the back and logged in and dispatched to a tech. It's almost lunch time and they do get to eat. Then your car isn't the only broken car in that shop. At 11:30 I would imagine most techs are already in the middle of a job. That shop because each type repair has different trained techs. You don't want a break man repairing your tranny or vise versa. You know the old thing about, sorry you have had to wait, but we promise you the same great service when it is your turn. You wouldn't want a tech to tear your car engine apart, push it back while torn down, and then diagnose someone else's car and come back to yours later. It just doesn't work.
So to sum everything up, you signed for a daig of $120, yet told them to stop repairs, so it is rather iffy with who is right and who is wrong. Did your husband pick up the car? Did you use their shuttle service? Did he pay for the diag? Usually when a car is picked up, the claim is closed and reopened when the car arrives again. Think in terms of an audit. Open tickets and no vehicle.
You chose that dealership despite the distance, so why not finish there. They have done the diagnosis and said the fee would be applied, but where will they apply it if you take it to another dealership. At that point they will likely want to charge you. They couldn't be that far away from your home since both you and your husband made the trip out there and back home.
You can ask for the service director and politely tell him/her what you are upset about, but at this point I don't think taking too long is reason enough to not pay. Maybe because you asked them to stop the work, but I believe he did it anyway to help you out, not to cause you to be more upset.
I totally understand the working, going to school, being Mom and having Mom duties, but you can't expect them to run shop by doing a free diagnosis. That is the reason they charge...so you don't let them use their computers, machines, tools, and knowledge to tell the alley garage what needs to be repaired.
I understand you are frustrated, but I think you should give them the chance to do the repairs.