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Reward: 1000xp, 10500g, King's Hammer
This is a tough quest in which you'll want to have finished most or all of the Upper and Lower Hadar quests before finishing this one. The castle you have to attack is fairly difficult with some strong enemy heroes patrolling nearby. Completing it allows you passage to the land of the elves, Ellinia.
1 - Castle Kronberg, King Mark
Speak with King Mark after completing the pre-req quest to begin this next in the main quest line. Then head through Creiston Mines in Arlania to Upper Hadar, and descend the lift at #2.
2 - Upper Hadar, Lift Down
Take this lift down to Lower Hadar.
3 - Lower Hadar, Portal to Taron Mines
In far east part of Lower Hadar, take this portal to Taron Mines.
4 - Taron Mines, Entry Point
This is where you enter from Lower Hadar. Proceed to the portal at #5 to exit back up at Ardan's Peaks.
5 - Taron Mines, Portal to Ardan's Peaks
When you reach Ardan's Peaks, the dwarven capital is at #6.
6 - Dwarven Capital, King Torn Digor
Speak with the King about the treaty to find out about his kidnapped son Tibold at Castle Bagacho in Taron Mines. This is the castle you'll have to defeat. Head back down via the nearby stairs, and proceed to #7.
7 - Taron Mines, Castle Bogacho
As stated above this is a tough fight due to the patrolling enemy heroes and the castle itself. When it is defeated, speak to Tibold inside about everything you can. It will open up a store of sorts. If you trade in your gold, you can have any type of rune or crystal. This costs a lot of gold, so it is best used in pinches or during the late game to make your character as powerful as possible.
After the falling of Bagacho, return first to King Torn at #6 to formalize the treaty, receive his excellent King's Hammer
(if you like having dwarves in your army), and return to King Mark. When completing this quest, you'll now have access to a horde of horsemen, in addition to earning the title Earl.