While an Investigator was in the Dreamlands, the "strange power flux" came into play. Only problem, no open gate to the Dreamlands exist on the Board.

1) Does he return in a location or street of his liking?

2) Does he stay in the Dreamlands?

3) Does he get LiTaS?

I chose 2. Not sure though I did the right thing...

Note that Flux says "may immediately return to Arkham", so it's optional. If no gate is open and you choose to return to Arkham, then you're LiTaS, probably best to just stay in Dreamlands. Of course, the game knows and would just see you LiTaS later (not opening a gate to Dreamlands), quite possibly a worse time-waste than going LiTaS right away.

So, the Power Flux only allows you to return to the Arkham location that has an appropriate gate to the OW you 're currently at. Am I getting this right?

I love this forum, it make life so much easier!

Yes, you're right. The wording "return to Arkham" implies you return to a location with a gate leading to the OW you're currently in. Dam pointed out that it's not compulsory: if you prefer, you are allowed to remain in your current OW