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Walkthrough

When you enter the Graveyard District with Edwin in your party, he'll tell you that an artifact called the Nether Scroll can be found somewhere in the Lower Tombs. When you reach Level 2 of the tombs, you'll run into the guardian of the scroll, a lich named Nevaziah, on the eastern side. Nevaziah will tell you how he fled from the Cowled Wizards and ended up in the tombs, and he might even reveal the location of the Book of Kaza (for Korgan's companion quest). But then Edwin will take over the conversation, and it will lead to a fight.

Nevaziah is a lich, but he's not in the same league as any of the liches from Kangaxx's quest from the Docks District. Nevaziah won't stop time or cast any protective buffs, and with six characters against him, he might not even get a spell off. You'll earn 8000 xp when Nevaziah dies, and Edwin will grab the Nether Scroll from his corpse (although it won't show up in his inventory), which will earn you an additional 11,750 xp.

Two days later, Edwin will tell you that he's deciphered a part of the scroll. This knowledge will earn him +20 lore, -1 to his saving throws (that's good), and 50,000 xp. Then a day after that, he'll discover a spell of transformation in the scroll, and it will change him into a... woman (complete with a voice change). Edwin will denounce this "outrage against nature and order," but he'll be stuck with it for a while.

At some point later, you'll be visited by a Red Wizard named Degardan. He'll ask you if you've seen a "self-serving nerveless worm" named Edwin, and he'll mention that a large bounty has been placed on his head. If you point out Edwin to Degardan, then Edwin will turn hostile and probably die pretty quickly, and afterwards you'll earn 5000 gp and 5000 xp, but obviously you'll lose Edwin as a companion. If you lie to Degardan and say that you've never heard of this Edwin person, then Degardan will leave.

Two days later, Degardan will return. He'll recognize who Edwin is this time, and he'll transform him back into a man. In thanks, Edwin will attack him. Degardan is a capable mage, but with six against one, you shouldn't have too much trouble with him. You'll earn 8500 xp for killing Degardan, and you'll find a Quarterstaff +2 and a Wand of Monster Summoning on his corpse.