Today’s second (more interesting) glitch:
This example has all sorts of problems…
Do not put dialogue on a separate line from its tag.
Capitalize the first word of a sentence. If it’s for dialogue following a tag, you still need to capitalize the first word of the dialogue, even though it’s technically continuing the same sentence.
Do not use a colon instead of a comma for dialogue following its tag.
You could use a period (for less abruptness) instead of an em-dash after Pinch me, but it needs punctuation of some sort.
A period at the end of dialogue belongs inside the quotation marks, not outside.
Whatever is going on with that em-dash in front of the last paragraph, it’s wrong.
You don’t need both then and afterwards (and it should be afterward, without the s). I’m choosing to keep then so that the sentence ends with vanishes, which seems to be the point.
Your friend tells you, “Pinch me — I’m dreaming.”
You do as he asks.
He then vanishes.