Philosophical zombies

[The Grand Nudger]

-and yet that's how consciousness seems...to us.

No it isn't. That's the user illusion.

.......and -that's- exactly what dennet was referring to when he described the illusory nature of consciousness.  See how easy it is to clear that all up?

It seems to us that we are conscious... and we are.

Unless, ofc, the way you are using the term is to conform to some traditional view that asserts the accuracy of the user illusion.  Then we aren't..by that description, but not because nothing's going on..because the description was wrong.  

Dennett seems to think that because we're mistaken about the nature of our consciousness we're mistaken about the fact we know we're conscious at all. And he can't seem to tell the difference.

That's your misconception, it's a common one, read his footnote.  He thinks that we are not conscious in the way that we think we are, or the way that we have traditionally described ourselves to be.  

You can say what you like about the workings of X, but how X works is different to if X is.

And how x works is also..often, different from how x seems.  He..again, is trying to explain how consciousness works.  That strongly implies that he thinks it's a thing that needs explaining..don't you think?