This one was really easy, I'm amazed at all of the problems and frustrations some are having. Simple solution that requires only 3 level 1 skills and 2 scorpion traps. Two of these skills I had on armor or weapons, as what you are wearing for this battle isn't so important.
You need Level 1 in poison weapon, about 5 poison potions, level 1 in aura of command, and level 1 in deadly gift, all survivor skills. For your weapon use a good bow, I used the bow of Hilfin. The reward for rescuing the bowmasters daughter...what a cow she was. <img src="/ubbthreads/images/graemlins/winkwink.gif" alt="" />
Remember to pause between each action, like when you are switching skills, etc...
First, poison your weapon and then ready your deadly gift/scorpion trap, so that you can simply right-click cast it. Drop down the ladder, view dialog, <pause> and drop the 1st scorpion trap to get the attention of all the little imp dwarfs, and immediately click on the iron ladder to ascend out of the room. Re-enter, and you can assist the Scorpion take out the dwarfs, remember when you attack one, it will direct its attack onto to you not the scorpion. They may actually kill the first scorpion, so you may release the 2nd one at this point, and then exit via ladder and re-enter again. Josie won't summon the deathknight until you go north past the iron ladder or your scorpion heads up that way and attacks her. If you were able to wipe out all of the dwards with the 1st scorpion then release the second one. It will eventually head north past the ladder and she will cast to summon her deathknight. <pause> With your Level 1 Aura of Command set as active, right click on the deathknight. <pause> You don't have to have line of sight. You will gain control of the deathknight which will then attack Josie, in the meantime, she will most likely have cast blind onto your scorpion. You can see the little white eye on it.
At this point I pull up my statistics "Plate", so that I can easily hover my cursor over my bow to see how many poison charges are left after I perform the next step.
Move to the right or left until you can target Josie, then while holding CTRL, LEFT Click on her. Now you will continuously fire poisoned arrows at her, use you mouse to hover over her HP bar and your bow. When the charges are all gone, you may <pause>, and reapply the poison to your weapon. You don't have to retarget or start firing again, it never stops you, and you will reposition if by chance josie moves. She never moved on me. The scorpion and Deathknight kept her very busy.
If by chance she does manage to kill the deathknight, she will resummon him, so simply repeat use of the aura of command skill.
Now maybe thats too detailed, maybe not <img src="/ubbthreads/images/graemlins/smile.gif" alt="" />
