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Speak with Sheogorath, who will tell you to become the leader of Mania or Dementia. He will tell you that you have to kill either the Duke or Duchess. He then tells you to speak with the two priests to understand the rules in accession to either throne. To become Duke of Mania you must poison Thadon and bring his blood to the altar. To become Duke of Dementia, you must cut out Syl's heart, either way you will go it ends in practically the same sense of things.
Mania
If you speak with the priest of Mania he will send you to Wide-eye. She tells you everything easily, but it may require a little bribery. She will tell you that she does an errand everyday at noon. Wait until noon and locate her green compass marker and follow her down onto the Palace Grounds. She will flip one of the statues here and it will lead down into the Greenmote Silo. Follow her down and begin to sneak about.
Being caught stealing in the Greenmote Silo is a crime offense, and there are a bit of golden saints sneaking about down below. Hopefully your sneak ability has been increased throughout the game, if not try using an item that will help boost your sneak skill. Anyway, steal three
Greenmotes from a pile in the interior silo. Then make your way back to the Palace Grounds.
Go to the House of Mania and enter the Duke's Quarters. Keep your stealth high as there are quite a few golden saints lurking about and would be happy to catch you. Reach the large bottle on the shelves in the northwestern room here, and put the
Greenmote in there. Then move to the meal which is also on this shelf and place more of the deadly drug in it. Then exit quietly.
Move to the ballroom and wait until 8:00pm. Watch Thadon die and then loot his body for his blood and his
Diadem of Euphoria. Bring the blood to the altar at the Sacellum to become the Duke of Mania.
Dementia
Talk to the priest of Dementia and he will lead you to Kithlan and Anya, Syl's advisors. Inquire about getting close to Syl with Kithlan when his disposition is high. He will give you a
Dementia House Key which will give you access to her room. Repeat this process with Anya, and she will get the two elite dark seducers from her garden so that you will not have much trouble getting to her bedroom.
Once you have made your way to the bedroom you will find a dead body of the supposed Syl on her bed. Kithlan will walk in and explain that the body is merely a decoy. He'll lead you to some hidden tunnels outside in the gardens. Loot the room and walk out and to the left. There is a bust of Sheogorath that you must activate which twirls and disappears and in its place is a ladder. Take it down.
Xirethard will be a little challenging, boasting numerous ambushes from the dark seducers. Make your way through and you will eventually make it to the depths. Once in the depths, move into the circular room and dispatch the two archers. Push the button on the pedestal near the large urn. Proceed until you find a metal door. Walk inside and dispatch another two archers and then finish off Syl, who is in a lighter armor. Loot her heart from her corpse and then grab her war hammer,
Nerveshatter. It imbues the target with weakness to shock and then strikes with shock damage.
You can exit the depths by backtracking or taking the new path towards the Sub terrene. Regardless of which way you take, make your way back to the Sacellum and place the heart on the altar, becoming the Duke of Dementia.