Brage can be found 2 areas north from the gnoll keep (N and N or NE, anyway it is not coastline.
SPOILERS
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If you talk with him properly (I think the good answer to his riddle was Death) he will surrender and automatically transport you to the temple in Nashkel (maybe you should first talk with priest in this temple to activate peacefull solution?)
If you want two-handed sword +sth there is one N from the Carnival of Nashkel - one half-ogre - I think - named Argh... who wields it. There is also nice longsword+2 +cold damage in the Nashkel mines oveland area - You have to protect Prism artist from Greywolf.
Zbyszek
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