Spoilers!!
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The way into the room with the High Torturer is by activating a colored flagstone on the wall. (drag your cursor around there). It is just right of the northern shelf in the room directly to the northeast. Enter the room, and you'll get a dialog started with the guy. In that room, after you have the option to freely explore it, is your prized axe...that returns to its weilder's hand upon throwing it.
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Larry, Sell-Sword to the OHF