Um, I think you are doing this quest wrong, the Tanner is a bad guy, and silver dragons are "good" which should clue you as to doing something wrong. Did you get the quest from the Captain who mentioned that the murder victims had their skin flayed from them? Pretty sure that means any armor that might be made by the tanner would be really nasty. Biggest exp gain would be by doing the good quest, and killing the Tanner. I will clue you in, killing a silver dragon is only possible (as far as I know) in chapter 5, and if you kill her, you are well down the black path to the darkside, and the game is going to get EXTREMELY hard for you. Best bet would be to go to the bridge district and try to help solve the murders (which involve the tanner) (if I'm not mistaken, you get a really sweet piece of equipment from the guildmistress in Trademeet for doing this quest, something that a thief would really like to have, like, oh, the nights gift plus 5? I could be wrong, but I think it's close)
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