First, the wolf pelt - you can sell it. I don't think there's anything else to do with it.
The mercenaries are unrelated to the twisted rune. They play a part in the gong quest which you get via casting limited wish.
The twisted rune consists of just fighting the lich and friends. It will yield you the staff of the magi - which is a tremendously powerful staff - well worth the effort. However, it's a pretty tough fight. You'll have to either be pretty high level or use some devious strategy (or both).
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