Is there any way to create a new master 2 button key and fob?

The only way is to use a proper scan tool, erase the current keys and program in new keys cut to fit the car. That is why the dealer is charging that much. Now you might get a mobile locksmith to do the work for less, but many seem to not want to do the older cars these days. It sounds like you have a valid "sub key" which works on the locks and ignition but cannot be used to create new keys. To create a master key, you start with a master cut to the vehicle. Then you use the scan tool to turn on the auto registration in the ECU. With it on the security light will start blinking fast. Then you insert the first master key and after about a second the light will go out; you then remove that key and insert the next one. After 2 master keys are registered you then insert any sub keys to program those. You can have a total of 3 master keys and 1 sub key in this mode. That is also why your new key will not work. It is a sub key and the spot for that is already taken. The ECU reads the internal transponder in it and knows if it's a master or sub key based on the code it returns. So, you cannot make a sub key into a master key. Now if you use the scan tool to enter the additional key registration mode, in this mode you can add 2 additional master keys and 2 sub keys. However, you need to have the original master and sub keys already programmed to enter this mode. I wish they made some of them easier, but they have made some much worse. The worst part of it is that this was done to reduce or stop car theft, but most of the "better" thieves just go out and buy the equipment to make the proper keys.