Oblivion:Confront the King

Quick Walkthrough
# Traven promotes you to Arch-Mage and then soul traps himself into the Colossal Black Soul Gem.
# Take the gem and travel to Echo Cave.
# Make your way through the cave until you reach Mannimarco.
# Talk with him for a while, then kill him.
# Return to the University triumphant. The Arch-Mage's quarters are yours!

Detailed Walkthrough
Traven's Sacrifice
This task starts off unlike any other mission that Traven has given you. He explains that Mannimarco intended the Colossal Black Soul Gem for Traven's own soul and that you will grant his wish; by carrying the filled soul gem, you will be immune to Mannimarco's attempts to turn you into a Worm Thrall. Traven then promotes you to Arch-Mage - leader of the Mages Guild - and commits suicide, soul trapping himself into the Colossal Black Soul Gem.

Echo Cave
Take the soul gem from Traven's corpse and head to Echo Cave far north of the Imperial City, just west of Bruma. At the entrance to the cave you'll be greeted by a necromancer, a Dunmer named Bolor Savel, who says that he has the key to the cave and that he will relinquish it only in death. Prove him right and take the key from his body. Make your way through the caverns, encountering quite a few necromancers. The cave is fairly linear - just follow the compass.

The King of Worms
Mannimarco, the King of Worms, can be found in the large room in the ''Necromancer's Chamber''. A finger-bone style railing will pop up and surround the island. Mannimarco then "paralyzes" you and approaches to talk. He explains his fascination with the souls of powerful individuals and expresses disappointment that Traven did not come personally. Eventually he'll try to claim your soul and turn you into a Worm Thrall. When that doesn't work, the battle will begin.

Despite Mannimarco being a powerful Necromancer, he will often forget about his magic and simply attack you with his dagger. He has a fairly typical array of necromancer spells, and he can conjure powerful undead minions to aid him. You might want to summon something of your own to serve as a distraction. Kill him any way you like - this may take a while as he's essentially immune to most normal attacks or the attacks of summoned creatures. As an Altmer he is vulnerable to magical attacks so - fittingly - the most appropriate way to finish him may be a magical duel.

If you have trouble with this fight, jump into the water and he will not be able to attack you. This will give you time to recover and think of a new strategy.

Return Victorious
Return to the Arcane University and speak with Raminus Polus with the news of Mannimarco's defeat to ascend to the head of the guild as the Arch-Mage.

Benefits of Being the Arch-Mage
As Arch-Mage, you now have a few benefits that go with your position. This includes the Arch-Mage's quarters in the Arch-Mage's Tower. The quarters include their own spell making and enchanting apparatus.
 
After speaking with Raminus Polus about an ingredient collection, you will receive a mini-quest known as "Alchemy Acquisitions" that gives you access to an enchanted chest for duplicating alchemical ingredients.
As Arch-Mage, you can ask any of the Mage Apprentices at the Arcane University to follow you. Talk to any of them and they will ask you if they can help. You can ask them to follow you or tell them to go back to their lessons. There will be up to five apprentices willing to follow you; however, only one can follow you at a time. If you ask another, he will state that he's "busy right now".
If you have already completed Misdirection, Hrormir's Icestaff will be sitting at the foot of the bed when you enter the Arch-Mage's Quarters; picking it up at this point is not a crime.  You can also find the note from the Gray Fox in the night stand. Activating the night stand again will remove the note from your inventory.
As Arch-Mage, it is impossible to be expelled permanently from the Mages' Guild. You only receive a normal bounty for the crime you committed.

Notes
The King of Worms' Robes are unlike standard Necromancer's Robes.  Mages will still talk to you when you wear the King of Worms' Robes.
During Mannimarco's speech, he implies that he has reanimated the body of Vanus Galerion - the founder of the Mages Guild - and studies it frequently.
  An achievement will be unlocked upon reporting back to Raminus.

Bugs
 
 
 
Exit the dungeon and wait 3 days, allowing for the cell to reset. 
Reload an old save.
  You can use the Console commands:   followed by  
If no amount of re-loading fixes the problem, one workable solution is to engage Mannimarco in dialogue and then when he starts attacking you, run to the edge along the water and push him into it.  Jump in after him, enable some type of Water Breathing effect, and then force him (or let him follow you if he does) into the underwater tunnel.  In the tunnel, block all his attacks until he drowns.  You will then get confirmation that you have killed him and you can finally progress with the quest.
Another way if no amount of re-loading fixes the problem is to engage Mannimarco in dialogue and then when he starts attacking you, run to Echo Passages then out to The Jerall Mountains and run up a hill and run down. Mannimarco will receive fall damage although you can also, so make sure to bring healing potions and spells. Do this repeatedly until he dies. You will then get confirmation that you have killed Mannimarco and you progress with the quest.
Although you cannot physically hit Mannimarco, he is not immune to damage (see the drowning and fall damage options above).  He can still cause damage to you, which means Reflect Damage and/or Reflect Spell will still cause damage to him (Reflect Spell is usually best, since he is a mage).  He will have one random Restoration spell, but if you are lucky it will not be a Restore Health spell, or he will not have enough sense to stop attacking and heal himself.  After the completion of this method, the bone claws remain raised; however, a high skill level in Acrobatics can overcome this.
This bug may be linked to the chameleon effect. Load a save prior to speaking with Bolor Savel and remove all chameleon effects. You may re-equip, re-cast, etc. any chameleon effects after Mannimarco becomes hostile.
 
 
Lure Mannimarco back over the bridge you came on. Then, when the bone fingers come up, you will be on the right side. 
Go behind the curtain. By doing this, you can actually squeeze around the end of the bone fingers at the left of the altar as you face it. Then jump over onto the land. If you fell in the water, you'll need to swim out of the tunnel at the opposite end of the room.
 
 
 
 
 

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