Playing 2-5 NL it was a new game we had been playing about and hour when this hand came up. i had been raising alot pre-flop cause the table was kind of nitty. I had my $500 up to around $800 or so.

I was in middle position and raised it to $25 with 5,7 diamonds and i got called by the button who i had labeled the rock and he had around $700. he had come in maybe 2 pots since we had started. i aslo get called by the SB who was kind of passing time but was no threat

Flop is.....8-9-6 r .... SB checks to me and i bet $50. The Button just smooth called me and i immediatley started thinking im about to stack this guy he has a hand like a set or maybe an overpair..

Turn is....K completing rainbow.......i bet $125 and he quick calls me so now im thinking WOW he definitely has a set.

River is.....2 i thought i needed to value bet him just in-case he didnt have a set and was going to call me with JJ or QQ... So i bet $150 and he say raise it and made it $400... It seems this may be an easy all-in but i had the funny feeling that something was wrong... I made the crying call and he showed me the 10,7 os and i almost threw up my lunch. how could i have mis-read a player that badly...was my river call a bad call giving the circumstances or was the river bet just as bad as the call

I think your assumptions were correct all the way except one: he's a rock.

Maybe he was just waiting until he had position.

OK its easy to play for quite a while without getting a hand that you can play even if you aren't super tight. But lets say you are right and he is a rock.

A rock is someone who has tight preflop standards (so 10-7 may be iffy), but a rock also doesn't put money in post flop unless he has the nuts. As the hand progresses the action if you think he's a rock makes it more and more likely that he has a strong hand.

So when you are under heat late in the hand you might re-evaluate whether he may have played 10-7.

He has position on you and you are both deep and you've been opening a lot so he knows he can lower his starting range standards. Also he may be frustrated by not being about never having a hand to play so he's stepped out here.

The call on the river is questionable and there is a reason why its called the idiot end of the straight.