So when you said "i cant level up" you could all you have to do is press accept. why the number turns red is because you dont have the required souls to level up a secound time. If your planning to use the schimitar, or a schimatar type weapon, then raise dex.
One last thing, this Iron Pig teaches you a good leason about this game, i wont spoil it but maybe you should attampt another aproch, even with you attacking as he walks away when you were attacking him you didnt even get him passed half, so try something else.