I can't remember the conversations, but there were some things you could do with that goblin guy:

- Mindread him to get the password for the chest behind him (had a set armour piece in it, but can't remember which set).

- When you're clearing out the main goblin caves in the area, you meet a beholder who wants you to find someone who can write down the Goblin history (e.g. someone who is both literate and can understand goblin) - goblin guy is you man.