This is a pretty good piece. I particularly liked the mood and the manner in which it was enhanced. There were some bits I would have liked to see modified a bit; things that would have enhanced the mood. I won't delve into grammatical mistakes, Muse has seen to that. What I will do is pick out a few early paragraphs and offer ideas that might aid your intentions.

I entered the dungeon club lounge as usual. It seemed quiet. The lights were off and only the flickering orange and red flames of the open fire illuminated the room.

This starts with a mood of melancholy. The manner you structured the first two sentences provides a good start. The last sentence fizzled a bit, though. It should have been two sentences.

The lights were off. Only the flickering orange and red flames of the open fire illuminated the (darkened) room.

Adding "darkened" it would have further accented the melancholy you are going after. It's a purely stylistic adition, but such things can truly enhance a story. Also, I might have chosen different way to describe the flames; "flickering flames" seems a bit too jaunty for this story's mood. I might have used "dancing", or eliminated description of them entirely.

In the warm glow of the fire I could see a figure sitting on the couch in front of the fire. Even with his back to me I could recognise the familiar silhouette of Dog.

This went suddenly passive. There is no need to bring "I could see". Make it immediate: "I saw". The passive voice detracts from the mood and is also a change in perspectives that does your story a diservice.

“Unusual.” I thought. Usually Dog would have been aware as soon as someone entered the room and greeted them his usual “Aloha” and would be rising to stand as a lady entered the room.

This was too drawn out. Again, this is too passive with "would have and "would be". Also, soften the construction of this with simplicity. It would add to the mood. Muse offered an excellent change.

Today he just sat staring into the dancing flames, he didn’t know I was there, he was miles away.

The word "just" is completely out of place and unecessary. This is another instance where an adjective could add to the mood. How was he sitting and staring into the dancing flames? Was he sitting serenely or sadly? You described the one thing that didn't need description at this point; the flames. Not that it was bad, but it didn't tell the story you were telling. Finally, "Miles away" is a phrase best left to dialogue. Find another manner to describe his entranced state; something not colloquial.

These are just a few examples of things I might modify. There are more, but I don't want to beat you over the head with everything.