Did anyone actually find that rumoured fallen paladin who seeks that drow merchant or was that the deep gnomes lying?

or possibly that was the paladin's corpse where you get the sword....?

I'm pretty sure the fallen paladin is the body with the sword Pale Justice. There's nothing in the hint book about this paladin, so there's no quest and nowhere else to find him.

There is likewise no quest involved with the discovery that Nym claims to have caused the rift between the elves and dwarfs. It's not even clear to me he's telling the truth about that.

Thanks for the info sibley, good point too. Cheers