Sounds like a bug. Try talking to the woman in charge of stronghold building - forget her name - in the hermitage at the very bottom of the Telvanni Council House. That may kickstart things. If that doesn't work, post back and there's another slightly more drastic fix to be had.
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Say say, oh playmate
i cannot play with you
my dolly's got the flu
boo hoo hoo hoo hoo hoo
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