It sounds like your cover somehow got blown in which case you're probably in big trouble when it comes to the city. The drow - mislead message is likely just the result of a drow mage casting the mislead spell which would tend to mean that the drow were already aggressive. Short of taking on the entire drow city (which is doable), you may want to revert to an old saved game or else you'll miss out on all of the quests in the city.
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