Your dream is rich with symbolism and emotion, reflecting various aspects of your life and psyche. Here are some interpretations that might resonate with you:

1. New Neighborhood and Community: Moving into a new neighborhood where everyone knows each other suggests a longing for connection and belonging. The vibrant, queer community indicates a desire to express your identity freely and to be accepted for who you are. This could symbolize a need for a supportive social circle.
2. Past Relationships and Memories: The appearance of Wil Myslivy from middle school might indicate unresolved feelings or nostalgia related to your past. It could also symbolize a part of your life or identity that you are revisiting or reconciling with.
3. The Hot Woman and Intimacy: The encounter with the woman with vivid purple hair represents attraction and desire but also highlights feelings of insecurity and pressure. Your initial interest followed by anxiety about intimacy indicates an internal conflict regarding romantic or sexual relationships, perhaps dealing with fear of vulnerability or performance.
4. Running and Stumbling: Running back and forth suggests a sense of urgency or a struggle to find your place. The sandy and uneven sidewalks symbolize instability in your current life situation. The stumbling may reflect feelings of uncertainty or difficulty navigating your emotions or relationships.
5. Insect Bite and Ethical Dilemma: The sharp pain from the insect bite could represent a painful experience or a source of discomfort in your life that you cannot easily address. The ethical dilemma you presented to the girl highlights a struggle between your personal discomfort and broader ethical considerations. This may reflect inner conflicts about how your actions affect others versus your own needs.
6. Awakening from Distress: Waking up from the dream after a distressing argument emphasizes the intensity of your feelings and possibly indicates a need to confront these issues in your waking life.

Overall, your dream seems to be urging you to explore your feelings about community, identity, intimacy, and personal ethics. It may be beneficial to reflect on these themes and consider how they manifest in your waking life. Engaging in conversations with trusted friends or a counselor could help you navigate these feelings more effectively.