It has been a while ago, but I talked to the alter and by chosing some dialogue options a whilwind appeared and started damaging my character then disappeared and the altar was cleansed. You got further dialogue options if by chance you have a Cleric of Talos with high Int in your party.
As far as the favor from Nickedemus (sp ?) he will collect it much much later, when you least expect it, so don't worry about that
