SPOILER:
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1.) Yes. You will meet him in Trademeet. After doing the major quest in Trademeet you will be able to meet some guy asking for your help regarding some people who are stealing skin or something... don't worry just look around..
2.) I don't think so. In this case the Mind Flayer is diplomatic enough not to test your power and he vanishes, unless you want to kick his arse and then the whole quest is gone