The ring isn't worth the hassle as there a far better items than that in the game. Just a thought though, did you get the ring from the barrel in the outside bit of the place where you start the game (just before you enter the room to speak to the person that gives you instructions to go to Balmora)? You need to get the ring there and give it to Falgoth or he doesn't have the ring to hide in the first place.
(Sorry if that makes little sense, I've just got out of bed  )
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