[guided]We now prove that the compatibility conditions are sufficient. Let $M \models \operatorname{DLO}$ and let $a_1,\dots,a_n \in M$ satisfy
\begin{align*}
M \models
\Theta_0(a_1,\dots,a_n)
\wedge
\bigwedge_{i \in L}\bigwedge_{j \in U} a_i < a_j.
\end{align*}
We must construct an element $b \in M$ satisfying all literals of $\Theta(b,a_1,\dots,a_n)$ that involve $x$; the literals not involving $x$ already hold because $M\models\Theta_0(a_1,\dots,a_n)$. For elements $u,v\in M$, write $u\leq v$ to mean $u<v$ or $u=v$.
First consider the case where $L$ and $U$ are both nonempty. Since $L$ is finite and $M$ is linearly ordered, choose $i_0\in L$ such that
\begin{align*}
a_i \leq a_{i_0}\quad \text{for all } i\in L.
\end{align*}
Since $U$ is finite and $M$ is linearly ordered, choose $j_0\in U$ such that
\begin{align*}
a_{j_0}\leq a_j\quad \text{for all } j\in U.
\end{align*}
The assumed bound condition applies to the pair $(i_0,j_0)$, so
\begin{align*}
a_{i_0}<a_{j_0}.
\end{align*}
The density axiom for $M$ gives an element of the open interval between these two parameters. We also need to avoid the finitely many forbidden parameters $a_k$ with $k\in N$. The finite-avoidance fact we use is this: if $p,q\in M$ satisfy $p<q$, then the interval $(p,q)$ contains more than $r$ elements for every $r\in\mathbb N$. This follows by induction on $r$: density gives the case $r=1$, and if finitely many points have already been chosen in $(p,q)$, one of the subintervals determined by $p$, $q$, and those points is nonempty, so density supplies a new point in that subinterval. Applying this with $p=a_{i_0}$, $q=a_{j_0}$, and $r=|N|$, choose $b\in M$ such that
\begin{align*}
a_{i_0}<b<a_{j_0}
\end{align*}
and
\begin{align*}
b\neq a_k\quad \text{for every } k\in N.
\end{align*}
For every $i\in L$, the choice of $i_0$ gives $a_i\leq a_{i_0}$, and $a_{i_0}<b$, so transitivity of the strict order gives $a_i<b$. For every $j\in U$, the choice of $j_0$ gives $a_{j_0}\leq a_j$, and $b<a_{j_0}$, so transitivity gives $b<a_j$. Thus $b$ satisfies all lower-bound, upper-bound, and disequality literals involving $x$.
Next suppose $L$ is nonempty and $U$ is empty. Choose $i_0\in L$ such that
\begin{align*}
a_i\leq a_{i_0}\quad \text{for all } i\in L.
\end{align*}
Since $M$ has no greatest element, choose $c\in M$ with
\begin{align*}
a_{i_0}<c.
\end{align*}
By the same finite-avoidance consequence of density applied to the interval $(a_{i_0},c)$, choose $b\in M$ such that
\begin{align*}
a_{i_0}<b<c
\end{align*}
and
\begin{align*}
b\neq a_k\quad \text{for every } k\in N.
\end{align*}
Then $a_i<b$ for every $i\in L$ by the maximality of $a_{i_0}$ among the listed lower bounds, there are no upper-bound literals to check, and the disequality literals hold by construction.
Now suppose $L$ is empty and $U$ is nonempty. Choose $j_0\in U$ such that
\begin{align*}
a_{j_0}\leq a_j\quad \text{for all } j\in U.
\end{align*}
Since $M$ has no least element, choose $c\in M$ with
\begin{align*}
c<a_{j_0}.
\end{align*}
By finite avoidance inside the interval $(c,a_{j_0})$, choose $b\in M$ such that
\begin{align*}
c<b<a_{j_0}
\end{align*}
and
\begin{align*}
b\neq a_k\quad \text{for every } k\in N.
\end{align*}
There are no lower-bound literals to check, and for every $j\in U$ we have $b<a_j$ because $b<a_{j_0}\leq a_j$. The disequality literals hold by construction.
Finally suppose $L$ and $U$ are both empty. Choose any $c_0\in M$. Since $M$ has no greatest element, choose $c_1\in M$ with $c_0<c_1$; repeatedly applying density and the no-greatest-element axiom shows that $M$ has more than $r$ elements above $c_0$ for every $r\in\mathbb N$. Since $N$ is finite, choose $b\in M$ such that
\begin{align*}
b\neq a_k\quad \text{for every } k\in N.
\end{align*}
There are no lower-bound or upper-bound literals to check in this case.
In all four cases, $b$ satisfies every literal of $\Theta$ involving $x$. Since $M\models\Theta_0(a_1,\dots,a_n)$ also holds, we obtain
\begin{align*}
M \models \Theta(b,a_1,\dots,a_n).
\end{align*}
Therefore
\begin{align*}
M \models \exists x\,\Theta(x,a_1,\dots,a_n).
\end{align*}
This proves the sufficiency direction, and together with the necessity direction proves the claimed quantifier-free equivalence over $\operatorname{DLO}$.[/guided]