You can probably just kill him. Nothing else is gonna happin' unless you're gonna get the armor. Which you're not...
As for the Rune, nothing happens. I think this one of those quests that they couldn't finish in time so they left it like this.
SPOILER!
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There is another way you can fight the Twisted Rune though. It has nothing to do with the armor however. If u wanna be spoiled further, let me know