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Initiating this quest requires that you talk to Sammy, Otis' apprentice at #6 and ask him about the secret stash of the smithy, which is in the anvil container next to Otis at #7. Sammy'll ask for 500gp in exchange for that information, but you can use Bluff to get him down to 100. Inside the small cache you'll find a few gems, a magical longsword +2 and magic chainmail. If you take just the gems (or simply nothing), Otis will stop you afterward and ask either where you got them or mention that his stash was disturbed. This will begin a conversation about how he's been hired to detect evil in the area. Afterward, you may find that Otis will not say anything if you go back and take the other items. However, if you first take the weapon and/or chainmail Otis will be become angry and likely attack your party. He's a good source of masterwork items and a good fighter, so weigh these options when considering what to take. There will be many a magic chainmail you'll find and better weapons than the +2 longsword.

When you've made your choice, head back to Sammy and tell him that you found Otis' Stash. He'll say he doesn't want to know what you plan to do... so end the conversation instead of choosing the "I plan to..." option, and the quest will be completed.