I agree with the other posters.
However, if I didn't, my view of the next step would be to obtain an affidavit of a competent independent mechanic stating his opinion that the real problem is XYZ, as well as his estimated cost of repair. I would expect you'd have to pay the mechanic a fee to provide this. If XYZ was indeed covered by a warranty, present the affidavit to the dealership, and demand repair. If they refuse, file a small claims suit. Your principal piece of evidence would be the affidavit.
Regardless, I think the dealership is probably right, so you're likely out of luck.