The chicken rune is a quest item, though most would probably kill the guy that would want it.
It's got nothing to do with the soul forged chicken in Broken Valley. The quest where it can come into play is in the town of High Hall. When you arrive there it will be the main quest with the attacking orcs.
The hermit that is summoning orcs to get revenge on the town. Talking to him and finding a peaceful solution is where the chicken rune comes in.
Are you talking about the dragon stone that teleports you to the battle tower or to transform you into a dragon? If it's the transformation one you might be in an anti dragon zone or too near cliffs and trees to use it.
