Just gave it back after 2 days of renting one. I got a slight scratch on it when I took a sharp turn, really nothing serious or anything but I was prepared to pay for it's repair as that would only be fair. Unfortunately for me, after the rental person inspected the bike and saw the damage he brought me into the office and demanded I pay 12000 baht. All for some slight scratches. I was shocked and told him there was no way those scratches were worth anything like that and told him I was clearly being extorted by him. Problem is when you rent these things from them they keep your passport, and essentially he had me by the balls and me and him both knew it. I managed to talk him down to 9000 but it was still pure robbery. Sadly I had no choice and had to pay to get my passport back. The hostel owner told me later that this type of thing is all too common and he sees it happen all the time. I've learnt to NEVER leave my passport hostage like that again, a lesson well learned, but an expensive one at that. Anyone ever have an issue like this? Just venting really...
I heard people mention this happening to them also. I think it may be a scam. I would try asking the tourist police to tell them to give you back your passport. If they wont, then I would contact your consulate. Likely if the tourist police come around, the price for the repairs will drop a lot. Maybe they will still charge you something in order to save face and make up some nonsense about making a mistake.
Oh, I just read the end of your post now. It is too late to try my suggestion. But, it may be an idea to report it ot the tourist police anyway, if you have time. If it gets reported enough, maybe they will react faster when somebody comes along with the same problem in future.
A lot of scams happen in Thailand. Keep alert for it.