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1 - Mardaneus' House
You'll find that the front door to Mardaneus' house is locked, and that Mardaneus has been locked inside. Furthermore, the entrance to his house from his cellar won't be there any more. So you'll have to hunt for the key to his house. You'll find it at #2.
Once you've unlocked the house, just talk to Mardaneus to convince him to join the Council of Seven. For that you'll earn 136,000 experience and 2 reputation points.
2 - Lanilor's House
Of course, you won't find Lanilor inside the house. Instead, once you get close enough, somebody named Demona will pop out and attack you. Demona is level 39, but once you've done enough damage to her, she'll teleport away. You'll see her later.
Inside the house you'll find the key to Mardaneus' house (#1).
