Sure, you deserve full amount of security deposit in this since your tenant owed you so much. However don't tell your tenant so yet since they asked some deposit refund. These kind people are desperate and they may trash your property in very bad way.
Don't refuse or deny Tenant's request before you get the property back. Try your best to calm them down to get process ended peacefully to minimize the damage.
You may offer something like "I will consider some credit back if you return the property in clean condition." Since they know that the Sheriff is going to lock out, they may voluntarily surrend the property. If they cooperate, you may give them some cash to get keys back if they didn't trash the place.
Although you may lose some seucrity deposit money, you may avoid disasterous situation which may cost you much more.
Just my 2 cents.
