You could lower the difficulty level of the game for the duration of the quest. It is a pretty tough one fot the point you're at.
I did feel when I first played that there were some clues--the smooth flattery of the lord himself in the Copper Coronet, his unwillingness to divulge anything until you showed up--the made this particular request for assistance sound like a setup. I consequently didn't take it for a good, long time.
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