Greetings @Predatorsmasher
In PRO, like in the older Pokemon games, TMs are limited to a single use. This is why, after using the item to teach one of your Pokemons the move, it disappears from your inventory. If you wish to teach Dig to another Pokemon, it's available for sale in the Celadon Dpt Store.
As far as I know, the Dig TM is not mandatory in any way to go through story. You might have missed a trigger in the questline.
Can you please confirm that you talked to Sergeant Rick, the police officer outside the Game Corner, and if you did send me a screenshot of where the NPC isn't showing up?