Acquire a veilfire torch at the entrance of the area, take the torch with you to light the braziers in the "Research Tower" in the following order: 1. Start with the owl at the bottom. 2. Next move to the deer at the top. 3. Then light the dragon. 4. And finally the wolf statue at the bottom, this will inturn yield the dagger from the elven box in front of the Dread Wolf statue.