The dragon Erathsmedor will not take the shrould of Elsera making hard to go any farther in the game.

First of all: Make sure you're in Dragonspire if you're trying to give him the shroud. It won't work if you're in the Shire.

Second: Did you say "Elseramavin" to him first? He should then ask for the shroud.

Third: You have to be VERY close to him to give him the shroud. Make sure you're in 'Give' mode rather than 'Use' mode, and click on him. If he doesn't take it, move closer. Some people have said they practically have to be inside him to get it to work.

Hope this helps!

-Sazerac

I found it also helps to have the character with the ring given by Nivius (either in the back or on the character's body)do the talking and giving.