Phil spoke with Anne at the Witches Roost and received a note.

[The artifact you seek is in the possession of the Church of Pelor
It is a blade of pure midnight.]

When moving to leave they found their passage blocked. The barbarian they had planned to join them, Arete, Turned out to be working with a Cleric of Pelor who had followed the group from Sentinel. He had come to avenge his teacher, and had recruited Arete, and a hunter the group had left for dead. After a long fight, Losvir charmed the barbarian into leaving, forcing the cleric to re-evaluate his position and cast a spell, disappearing.