This is a rather strange situation.  I put a friendly beholder into my game.  This beholder is a librarian in a great magic library.  They are totally friendly and like interacting with and helping out other people and only become hostile if there is actually a real threat that they might be harmed or some harm might come to the library, which is both their work place and their home.  Even then though, they dont kill people (although they have all the standard beholder abilities, so are perfectly capable of killing people)

Basically, I made them the polar opposite of what a beholder usually is.  I thought having a creature that is usually only known as being a vain, narcissistic killing machine, be the entire opposite would be unique and fun.

So, when my players visited the library (which I knew they were going to) I had the beholder shout out that he would only be a moment and then started to describe what they saw as this huge creature slowly floated round the corner to greet them.  Before I had even finished describing the scene, one of my players screamed out "its a beholder" and cast her most powerful spell at it.

The beholder is a much higher level magic user that any of the party - they shrugged off the attack and cast sleep on the entire party, who woke up in a jail cell and were charged with attacking a citizen (the beholder.)  I had thought that this would have showed the party that this beholder was different than what they had first thought and had planned on fining the party half their gold and then letting them go.

The party refused to pay the fine though and the Druid who had attacked the beholder made this speech about how the entire town was deluded and didn't know what kind of threat this filthy beholder posed to their safety and that if the towns guard had any sense, they would return the parties weapons and let them go kill the vile creature before it was too late.

I didn't know what to say in the moment, so I had them put back into their cell while their request was considered.  On the way back, I made the guard escorting them to the cell tell a story about how the beholder had saved his daughter from being eaten by a troll and had did lots of good things in the town.  Basically, I was doing everything I could to show that this beholder was a good guy. 

The druid said back and I quote "so what, its still a beholder and the only good beholder is a dead beholder"

I really dont know what to do now.  It seems that the party are going to try and kill this beholder no matter what, despite knowing that its a good beholder and despite it clearly being a much higher level than them.

Any advice on how I can deal with this unexpected situation would be much appreciated.

You could always let them try. It sounds as though you haven't much choice; if you keep locking them up you'll get nowhere.

I have three instincts. The first is Silvva's (though I would give my players a friendly ribbing and would have a guard or local judge contemplate execution before deciding banishment).

The second is if they continue to persist, have them be broken free by a "freedom fighter" group, and have them run a campaign to "free" the town, but also make it perfectly obvious that they are actually joining a bandit group and will have to commit acts of true evil to go against this beholder. If your players *want* to be discriminatory people and do evil things based on personal beliefs, let them but also make it known that's what they are choosing to do. If it's not actually want they want, then the players would see the error of the ways. If you show them a radicalized version of what they could be if they continue to do this, then they might not do it.

The third thing is one most people disagree with and I only ever feel comfortable doing it on rare occasions. If one of the characters is more cool-headed, and the player tends to go along with what you put down, then tell them privately that the Beholder is actually a good guy but that they can't tell anyone that you told them. They'll try to convince the other players of it and then you can have character vs character interactions as opposed to DM vs player arguments (which is where this could go).

Oh I wouldn’t either. But have an NPC possibly float the idea, just to emphasize just how bad of an idea it is to try it.

Sevvir and others have good ideas here, and I'll only second the  most obvious and simplest solution: let it play out. The beholder can take care of itself pretty well, and the good people of the town will probably come to its defense against your party that refuses to accept that a beholder can be good. It occurs to me also that you could warn the players about making metagame assumptions; just because the MM lists the beholder as evil doesn't mean they all have to be. 

Good luck with it.

Personally, instead of having all this morality , let them kill the beholder. If they die in the process, you can explain that while the beholder is friendly, its awfully powerful, meaning potential death.

And see what hapens.

I like the responses in the thread here are my comments. 

1: I really like the idea of a misinformed rebel group of bandits. I would personally use that to show the players their bad assumptions and how evil is often created from good intentions.

2. Is it possible that the PC feels railroaded and that this is their response? When long sequences of no player choice occurs weird decisions from players tend to happen. Not saying this is true just something to reflect on. I say this from personal experience. 

3.  Another option is to accept the players idea and make it true. They want to be rebel fighters freeing a town from an evil beholder that has charmed the city. Why not let this be true? Your setup is really cool but the story seem like it would work with the beholder being evil as well. Just a thought. I find a change my story often based on Player ideas and the story they want to tell. Perhaps this could be one of those times? Our role is not to tell the story we want but to allow the players to create the story they want. This could be an extreme version of that...

I find it cool that you want to use a creature in a nontraditional way. 

I have one question: Has the party encountered beholders before? If they have, then yeah they will have a lot of bias. If they haven't, ask them how they know all beholders are evil nasty creatures?

How important is the town? You could give the party a reason to leave then give them a reason that they need to go back to library for some reason in a few sessions.

Quote from DnDSwede >>

I like the responses in the thread here are my comments. 

1: I really like the idea of a misinformed rebel group of bandits. I would personally use that to show the players their bad assumptions and how evil is often created from good intentions.

2. Is it possible that the PC feels railroaded and that this is their response? When long sequences of no player choice occurs weird decisions from players tend to happen. Not saying this is true just something to reflect on. I say this from personal experience. 

3.  Another option is to accept the players idea and make it true. They want to be rebel fighters freeing a town from an evil beholder that has charmed the city. Why not let this be true? Your setup is really cool but the story seem like it would work with the beholder being evil as well. Just a thought. I find a change my story often based on Player ideas and the story they want to tell. Perhaps this could be one of those times? Our role is not to tell the story we want but to allow the players to create the story they want. This could be an extreme version of that...

 My other 2 cents.

1. Evil is relative most of the time. But this sounds cool.

3. I should steal this for my own campaign.

Actions have consequences.

Your players killed your awesome npc, no big deal. BUT, what they don’t know is that in doing so they have AWAKENED THE EVIL SIDE OF THE FRIENDLY BEHOLDER AND NOW HIS SOLE PURPOSE IS TO STUDY, FIND, & HAUNT EACH OF YOUR PC’S. 

Ill let you imagination take over from there. If you need more help feel free to shoot me a message. 

You run the risk of railroading if you block them from doing what everyone in the party wants to do. If they want to kill the Beholder, let them.

However, in killing the friendly beholder they have now created a power vacuum in an otherwise peaceful town. What happens when a very powerful creature that stabilized the surrounding area dies? Well, someone tries to fill the vacuum... 

You now might have the start of a political struggle between rival groups that otherwise wouldn't have done anything because a powerful beholder was living in the town.

Or Perhaps the beholder was all that was stopping a necromancer with having his way with finishing up his ritual to become a lich (since the beholder was defending forbidden knowledge locked away in the library). Now that the beholder is dead those forbidden books can easily be stolen and the necromancer figures out what he was missing to complete his ritual. The necromancer steals the beholders corpses, animates it as a beholder tyrant and completes his ritual to become a lich and control the town. For added emphasis you can have the lich send a "thank you" letter to the party thanking them for doing his dirty work for him.

Quote from Grizzlebub >>

You run the risk of railroading if you block them from doing what everyone in the party wants to do. If they want to kill the Beholder, let them.

However, in killing the friendly beholder they have now created a power vacuum in an otherwise peaceful town. What happens when a very powerful creature that stabilized the surrounding area dies? Well, someone tries to fill the vacuum... 

You now might have the start of a political struggle between rival groups that otherwise wouldn't have done anything because a powerful beholder was living in the town.

Or Perhaps the beholder was all that was stopping a necromancer with having his way with finishing up his ritual to become a lich (since the beholder was defending forbidden knowledge locked away in the library). Now that the beholder is dead those forbidden books can easily be stolen and the necromancer figures out what he was missing to complete his ritual. The necromancer steals the beholders corpses, animates it as a beholder tyrant and completes his ritual to become a lich and control the town. For added emphasis you can have the lich send a "thank you" letter to the party thanking them for doing his dirty work for him.

 This is great.

Quote from Sillvva >>

If the townsfolk really like the beholder, they may absolutely jump to his defense. That's not railroading. Imagine if the beholder were just an ordinary person, but the characters heard a false rumor that the friendly, kind-hearted mayor is secrety a cultist. Would the town jump to his defense? Is that railroading? No. The beholder librarian is just an interesting story element. Either the player characters can be convinced by the town to see reason, or face the actions of their consequences if they try to fight it. The world doesn't just change to fit your narrative.

Im not sure if that was aimed at my comment, but when I warned against railroading it was more on blocking the party from even attempting to kill the beholder.

Having the town come to the beholder's defense isn't railroading, that is logical narrative development. 

While I agree with everybody else in their opinions, I’d also like to point out that this *is* a Beholder we’re talking about. They are the quintessential DnD evil megalomaniac villain. They’re known for paranoid scheming, and your party may just simply be saying “this beholder is acting friendly to lure us in so that it can kill us”. If my DM put a beholder being nice in front of me, that’s all I would think about. 

Quote from VanZoeren >>

While I agree with everybody else in their opinions, I’d also like to point out that this *is* a Beholder we’re talking about. They are the quintessential DnD evil megalomaniac villain. They’re known for paranoid scheming, and your party may just simply be saying “this beholder is acting friendly to lure us in so that it can kill us”. If my DM put a beholder being nice in front of me, that’s all I would think about. 

I agree. This problem could have probably been nipped in the bud from the get go by having the players roll an Arcana check to figure out what they actually know about Beholders and Aberrations.

However, the DM didn't think about the player's reactions and assumed they would be okay with a friendly beholder without unintentionally letting player knowledge creep into character knowledge.

If they are as low of level as the DM is implying, chances are they have never encountered a Beholder and may not even know what one is. Their knowledge of what a beholder is might be severely limited, especially if this is the first beholder they've ever seen. I think there is some metagaming going on with what the players know as the "quintessential DnD evil megalomaniac villain" and what the characters know.

For all the character's might know this might be their first impression of a beholder and so they might come away with "Yea he's creepy as hell to look at, but he's polite and kind."

D&D is a collaborative game of expectations.  You absolutely can't make the players do what you want.  You need to "read the room" and design a game that the players want to play, or tell the players the type of game you want to run in advance so the players know and make characters commensurate to the task.  If they are attacking the beholders, I see 2 possible options:

1. They are super RP, the beholder is an evil creature, and it must die.
2. They don't care about RP, or their characters, it's a monster and needs to die

If it's #1, then that needs to become the campaign.  If you spend all of your time trying to counter their actions, you're trying to force their RP, which is never a good idea IMHO.  They either need to know in advance not to do that when making their characters, or you need to adjust the campaign to adapt to their playstyle.  Being the DM that says "this is my world, this is how it is, screw you" doesn't end up good for anyone.  Get new characters, new players, or adjust the campaign.

If it's #2...then you're playing munchkin, not D&D, and kill them, because that's what happens in munchkin.  Spend an hour each session making new characters to replace the disintegrated ones and move on until they get tired of throwing themselves at the unkillable monster.

I often use ridiculously high level monsters as quest givers, it adds gravitas.  I had an Ancient Brass Dragon giving quests to a 2nd lvl party of new players and the barbarian "jokingly" attacked him.  I said "roll to hit", he rolled, he missed, then the dragon 1-shot him and he's making death saves.  When he was conscious, the dragon said "next time I eat you" and the party toed the line for the rest of the game.