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The Dragon falls into the pit and disappears when one plays using Broken World however after dieing when playing the game using Dungeon Siege 2 she just sits there and does not fall into the pit. There is a difference between how the two versions handle the Dragon. In both cases the quest completes and you can now open the storage trunk and get the town stone. So it is not a game stopper.

The Crystwind Town Stone appears to be missing it's inventory icon. It could also be that the template for the Crystwind stone has been changed misnaming the icon or missing or incorrect punctuation.

Castle at Hiroth yes as you expected iryan and as Blondin235 has discovered it is the see far hack that is why I normally keep my setting around 60 instead of higher.

Blondin235 as what to do next it is really up to you. So that I could get to Hiroth quickly I turned right in Crystwind instead of left into the mine. There are still some secondary quests to complete around Elddim and Crystwind. But because of the open nature of the Utraean Peninsula and the various paths you can travel it does not really matter which you do next. Oh and by the way there are several other ways you can reach Grescal one of which exists in the great northern forest look for two towers and a bunch of Cats. In testing the maps I rarly follow the standard path to anywhere. I have found that you can get from any town to any other town by at least two paths.