Spoilers perhaps
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OK, I think you are mixing up few things here. First the imprisoned mage is not in any "building", he's under the ground, as the spell puts everyone there. The area is just near the dwarves who will tell you about that mage, out of that little "valley" they are in. Simply buy the scroll, wal out of that dwarf camp so that the right hand wall will make a turn, and cast a spell there. Mage will pop out and this will result in another "quest" of sorts;
The "building" thingie is near the snivelbin (or something) camp. It's actually a "machine" or sorts and contains the 'imprisoned' unlucky travellers. It's related to another quest what you can get from the gnome (snivelbin or something) camp. You need to release someone from that contraption..
And the fungus area is something else again..
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