At the top of Lovis' tower, on the floor with the skeleton smith, if you had looked into the scrying stone you would have been teleported to the dungeon, and would have exited out of that door. Alternately, had you returned the stone to the priest (wandering around beside the church) first, he would have looked into the stone, and after going into the church and getting a quest to find out what happened to him, you could have entered the now unlocked door at the base of the tower. Using the scrying stone yourself gives you a little better rewards (you can mindread someone for a stat point, who would not be there otherwise), and the priest is a lot better off (at least until you take the battle tower).
