yes it is supposedly an unsolved quest, along with dozens of other quests that were never solved on live. I would guess that:
A- the quest was broken, like so many other live quests and never fixed
B- nobody made any progression with it because no one wanted to run around handing in a super rare item to an NPC only to have it eaten
or C- the devs are full of shit and wanted to fuck with people
either way, since no one ever found any real information about a quest involving the item, it certainly has no quest on this server and therefore is best not handed into any NPC
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