Massive Chapter 1(Epiloge) and Chapter 2 spoilers...
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Bahamut, are you confusing the banishing of the evil demon in Helm's Hold at the end of Chapter One and the trial of the two brothers in Castle Jhareg in Chapter Two?
Using the Black Grimoire in Chapter One, you can banish Chaohinon of the Void from Helm's Hold. Using the Book Of Helm you can then summon the Guardian Spirit of Helm. [img]smile.gif[/img]
In Chapter Two you will find another Guardian Spirit in Castle Jhareg. The guardian gives you the task of judging the two brothers (lucky you! [img]tongue.gif[/img] ).
There are differing opinions as to who is guilty. Karlat was dealing with demons to gain power. He should have known that they would deceive him [img]graemlins/1pissed.gif[/img] . Quint is guilty - of stupidity

. Quint knows his brother is consorting with demons and yet he invites all the village children into the castle. Belial is the instigator of the crime (my usual choice). Some people have noted, however, that causing betrayal, murder and chaos is what demons do; Belial was merely acting according to his own (im)moral code. [img]graemlins/firedevil.gif[/img]
Wellard,
If you find Karlat guilty you will get 500 XP. Returning to the town, you will find it free of the Weave of time but in ruins. The ghost of the mayor will thank you with another ~300 XP and a chest of treasure.
If you find Quint guilty you will get 375 XP. Returning to the town, you will find it free of the Weave of time but overrun with fire elememtals and Red Slaads. The ghost of the mayor will curse you for making such a bad decision. Needless to say he will not be giving any treasure.
If you find neither brother guilty (i.e. Belial was responsible) then you can either give the phylactery to the Guardian Spirit or keep it.
If you give the phylactery to the Spirit then you will get 375 XP. The town will remain in the Weave of time (nothing has changed) but the demon Belial will also be trapped there as well.
If you keep the phylactery (a minor magic item) you will gain 375 XP. Returning to the town, you will find it free of the Weave of time but in ruins. The ghost of the mayor will thank you with another ~300 XP and a chest of treasure.