1 - Mekrath resides in this room, but he really isn't very difficult. Drop him, and then search his body. You can find a Robe of Fire Resistance and a Quarter Staff +1 on him. In the oven behind him, you can find a Rod of Resurrection, a Wand of Cloudkill, a Potion of Genius, and a Potion of Mind Focusing. 2 - There is an altar in this room. On top of it is the Portal Gem and a Harp of Discord. You'll need the Portal Gem for the Haer'Dalis quest. 3 - Haer'Dalis, the missing bard, can be found in this room. He is the actor in the basement of the Five Flagons Inn that was kidnapped by Mekrath. There are two ways of freeing Haer'Dalis (and thus getting him to join your party). First, you can simply kill Mekrath. The second way goes something like this: if you are nice to Mekrath, he will ask you to seek out an imp that has stolen his magic mirror and fled into the sewers. If you accept, you can find this imp on the eastern side of the sewers, just a bit north from the merchant. The imp is not hard to kill and is only assisted by a lesser earth elemental. The mirror is unfortunately broken and when you bring it to Mekrath, he leaves to repair it and gives you Haer'Dalis as a reward.