NOTE: This quest is only available in version 1.14 or newer; the Good Old Games and Steam releases have this patch already applied, but the retail versions do not. If you are running 1.13 or earlier this quest will not work.
To get this quest you will need to have begun the main story quest Krahoz and Zohark and gained access to the crypts. On the first level you may have noticed a chicken; if you cast Reveal on it you will notice that it is actually a man. If you have read the book The Power of Chickens (located in the alchemy lab on Level 4, the same place you go to begin Oliver's Treasure Hunt) you will know this is Lord Inut, who has discovered a way to become a sort of "were-chicken". Unfortunately it seems he is now trapped in this state.
To cure him, head back out of the Crypt and acquire the following ingredients: a leek, a carrot, a dragon egg, and a bottle of water. Leeks and carrots are most easily found in the garden of the attacked outpost, although you can also buy them from Maria's shop in the city or find them in various places throughout the world. For instructions on getting a dragon egg, see The Ultimate Weapon; note that you can only buy one dragon egg, so if you want another you will have to steal it or kill the dragon. You can find bottles of water in various places (including the castle kitchen) or you can fill an empty bottle from a washbasin (located in various places; there is one upstairs in the attacked outpost).
Once you have all the ingredients, head to the Yellow Tulip tavern. The cauldron here is what you will use to brew the potion. The barmaid gets very upset if you go behind the bar, so use Invisibility if you have it. Put in the leek, then the carrot, then the dragon egg; finally, use the bottle of water on the cauldron to get a "strange potion". Head back to Lord Inut and cast Reaveal on him; while his true form is visible, use the potion on him. He thanks you and you are rewarded with 20,000 EXP. Save your game at this point.
Talking to Lord Inut twice more will cause him to turn red and explode, dropping either a sword (which drains an enemy's life and temporarily paralyses) or a bow (which shoots fireball arrows); what he drops is random, so reload as often as necessary to get the weapon you want. The bow requires 40 Projectile skill to equip, but it is very useful; because the fireball is actually an arrow its damage is boosted by your Projectile skill, and if the enemy doesn't see you your Stealth skill will add a Backstab bonus. When fired from a long distance away you can deal an enormous amount of damage.