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Background
You'll receive this quest from Frederick in
Luculla Forest North (#1).
Walkthrough
Frederick will tell you that he was pushed off a cliff by his imp slave, and he'll ask you to retrieve a
Blood Stone Shard from
Maradino's Lair (#2) so you can use it to heal his broken leg. Picking up the
Blood Stone Shard isn't actually necessary. Any
Blood Stone will work.
When you return to Frederick after acquiring a
Blood Stone, you'll have to decide if you really want to use it on him. This will give you a choice between being Forgiving (immunity to cursed) or Vindictive (hit chance +20% for attacks of opportunity). If you keep the
Blood Stone, then you'll earn 3150 xp, and Frederick will limp away. If you use the
Blood Stone, then you'll earn 4500 xp, and you'll get a chance to play rock-paper-scissors with Frederick to convince him not to punish his imp (assuming the imp is still alive). Winning this game will earn you another 4500 xp. But at the end of the conversation, Frederick will become upset that you "spoiled" a Star Stone, and he might attack you. Defeating Frederick will earn you 6300 xp, and he'll probably drop a few random items.
1 - Frederick
2 - Maradino's Lair
You'll need a character with at least Perception 6 to detect the entrance to the lair (next to the tree).