So I retrieved the Axe of Stone but I returned it to the guy in the dwarven village rather than the king. Then I went to visit the king and he wants proof of what is going on in the caves. So I get the manuscript but the guards take it away when I enter the throne room. Now I can't get the quest to retrieve the armor.

Another thing I noticed, whenever I enter the throne room and then leave, I lose about 1/3 of my health and mana.