You can accomplish this quest in many different ways.

1st way:

Before you start this quest be sure that you have a diamond in your backpack (take it from Lord Sunrock's chest).

Go to Arakas Druid Camp and find an NPC called Yrian Earthsong. Say Name, Work and he will tell you about the Stone of Life.

Tell him Stone of Life twice and he will say that the stone has been stolen and you must find it and return it.

Attention: Say Stone of Life to him once and repeat it after about 15 minutes. Note that this is a timed quest and if anyone else has started the quest, Yrian will not give the quest to you.

He will tell you that maybe an Orc has it.

Go to the 3rd level of Jarko's Cave and find the Renegade Orc Leader. Say Stone of Life to him.

He we tell you that a Troll stole it from him. Go to the Troll's Lair and find Mhorgwloth the Troll.

Say Stone of Life and he will tell you that he likes shiny rocks.

Say Diamond and he will trade the Stone of Life for your Diamond. Go back to Yrian Earthsong and say Stone of Life. He will thank you and reward you with a Twisted Dagger.

2nd way:

When Yrian Earthsong mentions that the Stone of Life was stolen, go to the Thieve's Town and find Asarr.

Say Stone of Life and he will tell you that he does not trust you. Say Trust, Job, Yes, and he will tell you that he is looking for Lord Sunrock's diamonds.

Go to Lord Sunrock's residence at Windhowl. At the chest located near Lord Sunrock you will find a diamond.

Pick it up and go back to Asarr. Say Reward, Yes. He will thank you and tell you that when he is ready to teach you, he will call you.

Until version 1.21, Asarr never trains you on the technique that he mentions. Say Stone of Life and he will tell you that has stolen it from the Troll and he will sell it to you for 1.000 Gold Pieces.

Say Yes to buy it and go back to Yrian Earthsong. Say Stone of Life. He will thank you and reward you with a Twisted Dagger.

3rd way:

When you find the Stone of Life (either from Mhorgwolth or Asarr) instead for returning it to Yrian Earthsong, go to Lighthaven and find the NPC Araknor (located behind the Lighthaven temple).

Say Stone of Life to him and he will reward you with a Shadowblade.

Gain :

• Twisted Dagger for the first 2 ways
• Shadowblade for the 3rd way

Note 1: You can do this quest as many times as you want.

Note 2: If you take the stone of life to Jarko and say “Stone of Life”, he will remove it from your inventory, but give no reward.