You must get the Mayor of Glenborus to tell you that he is part of the secret
conspiracy (spelled right?)... You can do this by insulting him after u get the
quest to proof the guiltiness of the elf and retrieve the Stone Axe Of Duma...
after u get the quest talk to mayor (who is brother of the king of dwarwes) and
insult him about the how much he drinks beer... then he demands u to buy him some more... Byu them from Rimmer and then give them to him... Then talk with him and he eveantually reveal his guilty and he gives the password that you can go meet his [color:"orange"]friends[/color] and after that the sotnes have been moved from the entrance... When u retrieve the Stone Axe and then remember to
take the note that proves the quilty of the mayor... After that go meet the king and let the dwarwes have your equipment... They won't take the note and the Stone Axe... They are the only item they won't take... After chatting with king and you have proved the quilty he gives the quest related to Dragon Armor..
Then u can go see the dwarwen council and say you have gotten back the Axe... Then go and free the elf... He is outside the house...