SPOILERS!
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Okay. I've cleared out everyone in the Twisted Rune thing. First, what is that? Second, what am I supposed to find in there (besides the Staff of Magi)? Thanks.

Twisted rune are a bunch of assasins. you come across them later if you have a certain expansion pack :D and there is no point to them being there but to gift you the staff of the magi. Which is really powerful you know in fact i would never give out an item in a PnP game unless the quest they solved was of world shattering importance :D

The Twisted Rune are actually part of a larger quest that was left out of the final version of the game. Only the end battle remains. There were supposed to be ties to the "Skinner Murders" quest and possibly to that guy Roenall who runs a slaving business and was supposed to marry Nalia.