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Background
Siegfried will give you this quest when you talk to him in the
Temple Quarter (#1), provided that you haven't yet triggered the quest
Gold Rush.
Walkthrough
Siegfried will tell you that people have been disappearing from the Cemetery, and he'll ask you to check it out. When you arrive in the Cemetery, you'll find a talking ghoul named Vetala munching on a man's corpse (#2). When you talk to Vetala, he'll tell you that he doesn't kill people -- he just eats corpses -- and he'll offer to tell you the real culprits if you spare his life.
If you attack Vetala anyway, then he'll summon a variety of undead creatures to assist him, and they'll close in to attack you. The battle shouldn't be particularly tough if you use a silver sword and the group fighting style, and you'll receive 2000 experience points when Vetala dies. Then when you return to Siegfried, he'll reward you with 200 orens and 2500 experience points.
Note: If you let Vetala live, then you'll meet him again later in the campaign.
If you talk to Vetala, then he'll claim that the Scoia'tael are digging up graves and killing people in the Cemetery, and that they're currently camped out near the crypt to the north (#3). When you approach the Scoia'tael, they'll flee, and you'll have to make a choice: to chase them down and kill them, or attempt to rescue the "ape-people" they imprisoned in the crypt. You'll only be able to do one or the other.
If you decide to chase the Scoia'tael, then most of them will escape the Cemetery, but one elf will wait for you by the gate, and killing him will net you 2000 experience points. He'll also drop a
Deithwen Dagger. However, Siegfried won't be happy about you ignoring the innocents, and so he won't give you a monetary reward, but you will receive 3500 experience points.
If you enter the crypt, then you'll find five ghouls and alghouls, plus the people they're planning to eat, in the easternmost room. The ghouls will ignore the people and focus on you, making the battle pretty easy, and you'll earn 2000 experience points for finishing them off. Then when you return to Siegfried, he'll reward you with 400 orens and 4500 experience points.
Note: If you've already finished
A Posh Reception, then you won't be able to complete this quest and Yaevinn's quest
Echoes of Yesterday. You'll have to choose one or the other.
1 - Siegfried
2 - Vetala
3 - Crypt