When you enter the cell (using the stick in the hole), go straight to Grunaxe (in the first cell on the right on the wall wall you enter from) and talk to him then. You can talk to him for a while, and he asks you to help set the other spirits free. When you step in front of a cell door, it will open. Once you kill all the ghosts in the cell area, he will disappear so don't kill them first. I went back and talked to his son (Torin) to tell him what happened to his father, but he didn't seem to want to listen when I tried to tell him it was the Boogres that killed his father and not the dragon.
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