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Welcome to the board, Dryd!!!
You don't have to catch or kill the leprechaun to satisfy this quest. What you do need to do is explore Anephas' Tomb (temple of Isis) and find the area where you go visit Kerah. From her area you can swim out and you will find a small area with the leprechaun's treasure - THAT is proof!
Good Luck!!
Wyv
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