The dwarves entered an octagonal chamber with two doors, watched by three bronze statues. Wurgym went to investigate a door and the two statues next to it swung their axes, one of which buried into his arm. He convinced Lazarus to go to the other, who obliged and narrowly avoided a similar fate. Both doors were fake; Bialwa and Morgran found a hallway hidden behind the third statue, and when entering, activated a magic mouth spell that shouted an alert in Dwarvish.
From this passage, they entered the Great Hall of Khundrukar's Foundry, and were given a warning to turn around by some invisible foe. Wurgym recognized their dialect and parleyed with these occupants. He found they were Dark Dwarf, and he was speaking to a spy named Ghared Drenchglove. Ghared turned visible and tried to convince Wurgym to kill his party members while they slept, but Wurgym hated duergar nearly as much as he hated other dwarves, so refused. The spy was stubborn, and during negotiations Bialwa accidentally implied that both types of dwarves should overcome their past and work together. This immediately resulted in combat. Ghared was joined by two invisible guards, who magically enlarged themselves and attacked! The guards were skilled, downing Wurgym, and Lazarus tried to grab Ghared to stop him from attacking while continually being shanked. Ghared turned to run as the party slayed his compatriots, shouting out a warning to other duergar, but Bialwa accidentally blew up his brain while trying to subdue him.
The party decided to flee back to the Glitterhame to recover from their injuries. After a long rest, they returned to find that the bodies had been removed from the Great Hall. They followed the sound of hammering to the Bladeworks, and Wurgym again went to try diplomacy. On a bridge over a river leading to darkness, the ranger met with two more guards and the forgemaster Snurrevin Silthammer. To "prove" that he had killed Ghared but also his own party, Wurgym handed over his bloody Bag of Holding. Seeing through the naked lie, Snurrevin turned invisible and ran away with the bag, and another fight broke out immediately.
Now accustomed to fighting Duergar, the party was able to handle this combat much more smoothly. Morgran was knocked into a river that lead to the Black Dragon's den, but was able to fish herself out much more quickly, and Wurgym tracked the invisible Snurrevin as Lazarus and Bialwa dispatched his two fellow smiths. By sheer luck, Morgran ran straight into Snurrevin and bowled him over; realizing he was about to die, the spellcaster begged for his life. He returned the bag, and the party took him to Durgeddin's quarters along with his guards. Inside, the duergar's clan-leader Nimira Blastringer was preparing an ambush, but acquiesced when Snurrevin told her that they were hostages.
The dark dwarves explained they had entered Khundrukar through an area below called the Black Lake. The Foundry's northern halls were rife with undead, the door to the Glitterhame had been locked, and the way back was guarded by a Black Dragon that they nicknamed "Nightscale". The dragon had been hunting when they first arrived, and they were now stuck. Snurrevin had been trying but failing to forge a Dragon Slayer sword to try to fight off the beast, as all good materials had been stolen by orc raiders and past thieves. Showing pity, the party told the duergar of their adventure inside, and allowed them to escape via the surface exit.
Before they left, Nimira informed the party that in a northern shrine, Durgeddin's body lay desecrated. The party first went to explore the kitchens, finding that Arundil had created several Animated Objects that attacked non-dwarves. Lily and both Lazaruses found it dangerous to enter certain rooms without being bludgeoned by a flying table or chair, though neither Lazarus could understand why they were being targeted. They went to the shrine after only finding kitchen utensils and spoiled food.
Atop an altar to dwarven deities, Durgeddin's skeleton was bare to see. The monsters who killed him, two Ogre Skeletons and an orcish Wight, had been guarding his body for eternity; though the foes were fearsome, the heroic dwarves beat them from undeath to restore some degree of holiness back to the shrine. With Durgeddin's body laying in Enhanced plate armor, Morgran and Bialwa thought it best that the armor was removed so his soul could rest, no longer fighting an eternal battle. As an added bonus, Morgran replaced her rusted chain mail.
After another rest, they ventured into the haunted dwarf-halls. Lazarus opened up a room of six animated dwarven Humanoid Skeletons that attacked, and everyone had a good bit of fun blasting apart these weak foes. Further ahead, they heard horrible murmurings and wails; Arundil's Ghost still stalked these halls. The party proved extremely brave with the help of Bialwa's clerical divinity, resisting Arundil's attempts at possession and magical fear. Whenever he appeared, the dwarves struck him with spells and magic weapons. They eventually destroyed the ghost, who managed a faint flicker of recognition to Lazarus before disappearing.
They continued to Arundil's chambers, where a gargantuan Rug of Smothering prevented the non-dwarves from entering safely. Inside, Bialwa found evidence that Arundil had been reading books of darker magic beyond regular wizardry, and Wurgym found a chest under his bed containing an astonishing amount of gems and coins. They explored further looted rooms, which were mostly bare, but Lily turned out to be extremely proficient in digging up precious gemstones in the rubble that the raiders somehow missed. They passed an armory that had clearly been looted by invaders, skirted around an obvious Animated Armor that remained within, and finally came to the end of the Foundry; here there was a study den, still intact.
On the floor of the study, laying on a bedroll, was a beautiful human woman with pale skin and dark hair. She leapt up to greet the dwarves: "Finally! Someone has come to rescue me!"