Peter,
Thanks for the conversation. I read over the agreement. My first impression is that it's a very generic and open ended agreement that doesn't really do justice to the word "mutual". Usually, these generic agreements are not binding because they allow you to claim ownership to anything we fail to disclose before our conversation. I've also got a problem with the 3 year length of the agreement.
Having read the agreement and listening to your summary I propose a simple letter of understanding stating that you may disclose confidential business information regarding your "Document Management System" and that we will both disclose this fact before we state it. If more is required then I can send you some other agreements which truly protect both of us.
Also, if your summary is fairly complete, the only confidential piece of the conversation is the fact that you are going to build this application in the specified market.