ok i did it!
What confused me was that he ended the dialog (after the "near dead" stage), i guess giving you the option of looting around the alter before completing this- then i restarted a dialog where he ends in teleporting you to NW again.
INTERESTING- if you use "heal"- a normal heal spell.. on UNDEAD it harms them! i tried HEALING the spirit and it killed it! (when he was near dead- after he had surrendered. I used negative energy ray on it at one point, during the combat, which HEALED it! it is exactly like an undead- i tried turning it, but that did absolutely nothing. It was said in the plot that the spirit was halfway between the dead and the living realms, so i guess it all makes sense. When i tried healing the spirit during combat, it said that he "resisted" the spell!
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