Why can we save the gnomes ONLY if we first save Nere and then fight him and the duergar simultaneously?
1. If you ignore Nere and attack the duergar you have to fight the gnomes too (which strangely join the battle against you).
2. If you save Nere and want to save the gnomes it does not work as there is no such an option.
The only way to save the gnomes is to save Nere first and then attack him and fight him and the duergar. Only then you can accomplish the quest.
This is very weird and feels like hardcoded option which makes no logical sense at least compared to all other quests in Act 1. With other quests there is usually several ways to do things, but here only one option is present. What is the problem to slaughter the duergar and let Nere die from the poison. Gnomes will remain free, believe me they won't sit around with all their captors dead.
Lots of other ways.
1. Begin by murdering all the duergar just randomly, then leave nere in there to choke.. or open it up to murder him. Note gnomes stop digging if the duergar are all dead. Mound it easiest by killing all the small parties and then graduating to kill them from the staircase, forcing the duergar to waste rounds running towards you.
Lone people as known do badly vs a party so down in 1-2 rounds depending on spells/skills available after finishing off the duergar, either way he is dead meat. And the gnomes live!
2. Just leave him there to die for a lot of nights. Presumably. havent tried that so far, just seen vids its a possibility to find a corpse.