I'd suggest no one attempt to do this quest until it gets fixed. I've gone about grinding this faction out doing every step of the quest multiple times in order to work around the borked faction and the result is that despite doing the quest twice over the final turn in was refused.
Here you can see the mob has the correct faction, goes through the dialogue, has accepted the prior turn in and eats the final turn in anyway.
[You must be logged in to view images. Log in or Register.]