I had that strange thing with the water bottle too. Don't know how many times I tried to give the mad prisoner water, but he wouldn't even take it until I had that certain bottle in my inventory...then the diary lit up like the quest was fulfilled even though there was no entry for it in the first place.
I had another strange occurance where my characters were actually outside the boundaries of the walls...in the blackened area. They had somehow walked through the walls, couldn't get them back...so I had to restart from a previous save.
