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Well, I haven't killed him, but my advice is to give him the arrow then SAVE the game while he is still alive. Head back to town and see if you still get credit for the guild quest. If you still get credit there shouldn't be much of a problem.
Otherwise, it's generally better NOT to kill persons in the game, because you might have need of them later on (which is the case with Scabban in the crypt if you want more people than your initial wizard to do the Wizard guild quest)
//Jazzid
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