At #2 on the Dyrford Village map will be several agents of House Doemenel led by an Elf named Medreth. He is tracking down somebody named Nyfre, and wants to make an example of her for stealing from House Doemenel. This is one possible trigger for the task. If you decide you want to kill Medreth and his crew in the course of this task, the loot will include:
The entrance to the first floor of the Dracogen Inn as at #13 on the Dyrford Village map. The stairs up to the next floor are at #9.
Nyfre and her crew can be found at #12 on the second floor of the Dracon Inn. If you decide to kill them in the course of this task, the loot will include:
Nyfre wants you to help her throw Medreth off her trail.
The choices fundamentally boil down to whether to side with Medreth or Nyfre, and how. There are multiple ways to resolve the feud:
You can kill Nyfre and her crew for Medreth. Medreth will then reward you with 1,000cp. You'll also gain a moderate positive reputation with House Doemenel, and this in itself will be sufficient for them to allow you entry into their headquarters.
You can lie to Nyfre and convince her to go westward, straight to where Medreth is waiting. Medreth will reward you with 1,000cp. This also earns Deceptive dispotion.
You can convince Nyfre to flee, for which she rewards you with 750cp, and then lie to Medreth afterwards to misdirect him. The former action earns disposition towards Honest. The latter requires a Resolve check of 14 to pull off, and if successful earns disposition towards Deceptive as well as a minor reputation boost with House Doemenel. If you fail the Resolve check, it can lead to the possibility described just below.
Another possiblity is to let Nyfre to escape, and for which she rewards you with 750cp. You can go back and tell Medreth that you let Nyfre escape, which results in him and his crew attacking you. Doing so results in a moderate reputation loss with House Doemenel.
You can also kill Medreth and his crew before encountering Nyfre, and then tell her you took care of him for her. She'll reward you with the Night-Runner leather armor.
You can kill Nyfre and her crew, and then slaughter Medreth and his crew after he admits that Nyfre never killed anyone during her purported theft. There won't be any special money rewards in that event, but you can still loot the corpses of both sides.
However it plays out, a small xp reward is also the end result.
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