You can only talk to Erathsmador when he / she (what gender is that thing - anyone know??)is lying on her pile of treasure in Dragonspire. You can only get there by going through the mountain from the entrance that you put the letter in. And lastly, you can only get through past the guard (Bronze Dragon) if your lead character is wearing the dragon armour from the stout mines. Make sure you get the various quets to perform while you're in there.
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