I have cleared the first two caves and spoken to Egenia but have not found any villagers or blacksmith's son. Am I missing something or is finding them not important. Couple of walkthroughs I have checked both refer to findingnthem.

It's not really important. But yoshould find them on the second level. The blacksmith's son is in a seperate room, fairly to the center of the map (in a cave behind some Lizardmen). The other villagers are in caves behind the big altar to the south-western part of the map. But as I said: these quests aren't crucial.

Petrarcus ap Bhaal.

Thanks for info, Petrarchus. I have found all the caves but there are no prisoners held in them. I checked for all locations on a walkthrough map and I dont think I have missed any. Might go back to an old save just for laughs and try again. Good hunting, Tyke