I'm having the same issue with the same quest. I refused to give up Stingtail, killed Griff, and got the crest from the elf who asked me to give it to Sahelia's allies, and chose the reward from Sahelia. Went back to Stingtail, had the scene with The Red Prince's dream session with Stingtail, who then has nothing more to say to any of my characters.
Now I have 'Sahelia's Crest' in my inventory, but 'The Imprisoned Elf' still isn't flagged as being completed. Loving the game, but concerned that having these quests not flagged as completed is going to cause issues down the line
Edit: My quest log is even stuck on "We freed Amryo. Sahelia will no doubt be pleased. We should return to her."