Xzar likes to gather various components from the creatures you meet, and combine it with treasure to create new items...
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Xzar's Quest begins in the area in which you can do the Bioware-Quest with the Dryad of the Cloudpeaks.
Note: Xzar´s Quest does not start if you complete the Quest with the Dryad of the Cloudpeaks without Xzar in your group.
If you help the Dryad of the Cloudpeaks, the Quest starts.
If you choose answer 1 (“Leave her be. She´s not hurting anyone.”) Xzar´s Quest ends.
If you choose answer 2 (“Yeah! Let´s do it!”), Xzar drains the lifeblood from the Dryad of the Cloudpeaks. She attacks you and you must kill her.
After your victory, two Forest Spirits appear and want to ask for help.
If you enter a wilderness area after a while, the three druids Storm, Zosya and Blackberry appear and attack you.
You must find a Mithril ring. You can find Mithril rings in many places. After you have found the first Mithril ring, talk to Xzar.
If you did want the “Ring of Mental Defence”, choose answer 1 (“Oh, go ahead.”) You lose a “Mithril ring”, the “Ichor of the Dryad of the Cloudwouds” and 1000 gold. Come back after 5 days and talk with “Halbazzer Drin” again. He will give you the “Ring of Mental Defence”. After you leave the shop, Xzar is very happy.
If you did not want the “Ring of Mental Defence”, choose answer 2 (“No way. It´s nowhere near worth it, and we´ve got better stuff already.”) You lose a “Mithrilring” and the “Ichor of the Dryad of the Cloudwouds”. Xzar is depressed.
If you did not want the “Ring of Mental Defence”, but later have changed your opinion, return to "Sorcerous Sundries" after 5 days and talk with “Halbazzer Drin” again. He will give you the “Ring of Mental Defence” for 500 gold.
There are some other alternatives, notably the Sewer King (getting his ichor will result in new possibilities), and there are some interesting easter eggs to look for if you have Xzar and Montaron in your party. Encounters with Guards, banter and actions between Montaron and Xzar... "har har har, Xzar has a Jar..."