When you are through with the testing-rooms, you'll come to the old library. Speak to the lirbrarian-ghost.
Go to the quarters of the (dead) priests, search them. Take everything you find, loot the chests, read the diaries. Check the book in Amdusias' quarter, it'll open a secret compartment. Loot all stuff there.
You'll have a key now (from one of the quarters). Go downstairs now, but stay in the round room. On the ground-level, there's a chest that was locked, you can open it with your key now. Take the book. Read it (in the "quest item" part of your inventory).
Go back to the librarian. Talk about the book. Read the new book he gave you (it's the same as the first one, but actually part two).
You now have the blood (from Amdusias' quarters), the book, and just have to get the dragon-scales from the room with the... angry dragon. Have powerful healing-potions prepared.
