Killed the ore merchant because she was "useless", eh? Well, first allow me to do this [img]graemlins/laugh.gif[/img]
Now that we are over with this, I have to say that you have closed the quest for yourself. The dwarf will not talk to you because the ore merchant wont send you to him. You cannot get the illithium, not even fake one. Show's how you really should not go swords swinging at the people, since they may be very needed for something in the 'future'
If you really want to go through with that quest, only way to do it now is to cheat. Either ShadowKeeper, or CLUAConsole command. No other way.