To start off, I'm a dog lover...
Sorry, can't help you, but dog lovers should be welcome on this forum. Check out wikipedia on Larian studios: "Larian Studios is a Belgian game developer which was founded in 1996 by Swen Vincke who derived its name from his dog, Pilar"
But personally, you can derive from the dialogues with Arhu he'll be present in other levels following the one in Cyseal, so that might explain why you have the option to fight him, but no means to progress afterwards.