watching this thread I am now convinced that this is a quest of two halves. The actual quest is to find Grundel (he will be a body now I found one in the stout mines but may have found the one purported to be him on the island in the lake leading to the booger cave) I did kill Raskillion but upon my return to Scanthill he says (before you even talk to him) "Grundel is dead, I knew it" talk to him and he gives you the dagger. Whenever I went near him afterwards he kept on about Grundel being dead. As I had killed Raskillion I asked for a reward again and was sent to the booger caves to get their treasure so I killed him. I suspect you are sent that way in order to find (you should explore on the way )find Grundels body to complete the quest.
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