How we cite our quotes: All quotations are from Vertigo.
Quote #1
ELSTER: But I realize now that the deep change began on the first day I brought her to San Francisco. You know what San Francisco does to people who have never seen it before. […] She had found what she was looking for, she had come home. And something in the city possessed her.
Elster is very carefully setting the trap for Scottie by describing his own efforts to understand what's happening to Madeleine. It's all a ruse, of course. We admit that San Francisco can mess with your head (see: the 60s), but Scottie has been skeptical up to the point when he first lays eyes on Madeleine. The dialogue above happened earlier in the day, but we hear it in voiceover as Scottie locks eyes with the lovely Madeleine at the restaurant. He's instantly smitten, and his objectivity goes down the drain.
Quote #2
MIDGE: And the idea is that the Beautiful Mad Carlotta has come back from the dead, to take possession of Elster's wife? Ah, Johnny! Come on!
Midge is the voice of objective reality throughout the film. She loves Scottie and can't believe he's fallen for this story, or for this woman. Only when she visits Scottie at the hospital and sees how this has destroyed him does she give up. She realizes that you can't hope to win in a battle with a beautiful ghost.