Skyrim:Blindsighted

Quick Walkthrough
# Travel to Irkngthand.
# Speak to Karliah.
# Locate Mercer Frey.
# Slay Mercer Frey.
# Retrieve the Skeleton Key.
# Escape from Irkngthand.
# Speak with Karliah.

Detailed Walkthrough
After becoming a Nightingale, speak to Brynjolf. You learn that he and Karliah decided that you should be the one to replace Mercer once you deal with him. After you accept, he tells you to meet them at Irkngthand to stop Mercer Frey from stealing the Eyes of the Falmer and escaping with the Skeleton Key of Nocturnal.

There are some bandits camped outside Irkngthand, but they're okay to kill or sneak past. The entrance is at the very top of the ruins. If you have a follower, they won't be able to accompany you. It's a winding path to get to the top; you may wish to come during the day so as to see it better.

This dungeon is generally wide and allows enough space to sneak past most enemies. The Throw Voice shout could well come in handy to distract the numerous Falmer you'll encounter within so you can sneak past them.

Irkngthand Arcanex
Once inside, it is recommended you sneak everywhere because there are irises on the walls which will drop out Dwarven sphere guardians (masters if you are at a high level) that you'll have to fight.

Right into the first room, you'll notice an expert-locked chest next to the dead bandits. There is another chest with an adept-level lock at your left, near the crumbled columns. There is also a master-level chest next to the wall by the crumbled columns on your right. Two bear traps are set into the stone of the platform about halfway up the stairs so that the traps are completely hidden until sprung.

Defeat the Dwarven sphere inside the room with a shallow pool and proceed through the open gate. The next room has three more Dwarven spheres. Before going down the stairs, turn right and follow the path in the upper floor to find a chest. There's another chest close to the wall, on the lower floor.

Continue to the next room and you'll come across several spinning flamethrower traps. Just follow in the same direction they're spinning, and you can make it through without being hurt. You can also use your Become Ethereal shout to get across easily. A couple of Dwarven spiders will attack you on the way.

Enter the corridor and you'll find an apprentice-locked chest straight ahead. At the end of the corridor, there is a Dwarven spider and another chest. There is also an apprentice-locked chest on the wall to your right just before the lift to Irkngthand Grand Cavern; it is next to a stone table with a built-in alchemy lab. There are a couple of potions, two Falmer ears and some scrap metal on the same table. When you are done, enter the lift area and activate the lever to descend to Irkngthand Grand Cavern.

Irkngthand Grand Cavern
Karliah and Brynjolf will follow you now. Karliah believes Mercer knows that you're following and plans to ambush you down here.

There is a trap on the left side of the door. After deactivating the trap wire, go through the door and continue down the hall. There is a chest behind an expert-locked gate, at your left. In the same room there are a couple of potions, some gems, scrap metal and various ingots. There are bear traps throughout this part of Irkngthand, especially in the corridors that connect the chambers, so watch where you step.

In the large room, you will see a scene of Mercer sneak attacking a Falmer, but you're unable to get to him. To open the door in the next room, you have to activate the levers on either side of the room overlooking the camp - these levers activate gears to either side of the gate, so once you have pulled the first lever, you must reach and pull the second lever before the gears activated by the first lever stop turning. The Whirlwind Sprint shout can help here. The two levers can be pulled in either order to proceed. Be careful while crossing the chamber as there are spinning blade traps set in the floor that activate when you or your allies get close. There are two chests on the path to the east lever: one is next to a Falmer tent and the other one is next to the lever itself.

The next chamber is in ruins and is full of Falmer. Take the ramp along the south side of the chamber to find a chest behind a tent. At the west end of the chamber, near the collapsed tower, a set of stairs leading down is blocked by rubble. A chest with an adept-level lock can be found among the rubble.

Take the ramp next to the rubble-filled steps; it goes north and then curves back toward the south wall to a door. Enter and you will reach a room with a dead Falmer inside. Behind an open gate you'll find some empty chests, scrolls of detect life (which will come in handy when fighting Mercer) and a mirrored message from Mercer. The message reads "One step ahead - Mercer"  There is a bear trap in the first part of the corridor leading out of the room.

In the next room, shoot the Dwarven centurion with an arrow while still standing on the steps - the Falmer will then fight and destroy him (it can also be activated via a button located on the side of the steps, if you drop down on the southwest side). Take the stairs on the east side of the chamber next to the skeever pen, and work your way up and around to the south end of the chamber. There are three bear traps in the walled corridor. There is a Frostbite Spider nest with a few living spiders and a single egg sac. 

Moving ahead, you'll find a door leading to Irkngthand Slave Pens, with a Falmer chest to its right, and a Dwemer chest to its left.

Irkngthand Slave Pens
The pens are used as a hive by the Falmer. There are 100 Chaurus egg sacs in the slave pens, the fourth highest concentration in Skyrim.

Defeat the Dwarven spider and head up the stairs to the west to find a couple of ingots behind an apprentice-locked gate. As you come back out of the gate, turn right to harvest some glowing mushrooms along the south wall. In the southeast corner of the room, a chest is hidden behind some rubble.

Down the stairs, you'll find a torture chamber with two Falmer and a dead thief inside. You can kill both Falmer by sneaking through the grid and activating the trap lever.

The corridor heading north and east has three pressure plate traps. Karliah will tell you that you have a choice between sneaking or fighting the Falmer in the large chamber beyond. There is a chest located inside the third Falmer tent on the right. There is also a chest in the tent across from the third on the right.

The next room has a simple pipe maze. Kill the Falmer and head up the ramp along the west wall to find another chest with an apprentice-level lock. Further down the room you'll face more Falmer and chaurus through the path that leads to Irkngthand Sanctuary. On the east wall, a nook covered with spiderwebs has an egg sac with a spider egg. Go down the ramp on the west wall, and there is an expert-level locked chest in the eastern-most tent. If you wish to bypass the enemies here, you may also sneak across the overhead pipes. Just before entering the corridor that leads to the Sanctuary, there's a locked master-level chest next to the Falmer door.

Irkngthand Sanctuary

In the sanctuary, you'll see a short scene of Mercer prying out the eyes of the Falmer statue. Mercer will then collapse the ledge you're standing on, and after a short conversation, you will have to fight him. During the fight, he will use his Agent of Subterfuge power on Brynjolf, causing him to attack Karliah. This will keep Brynjolf and Karliah out of the fight. Mercer will turn invisible occasionally during the fight (position yourself on the stairs and let Mercer come to you; for whatever reason, he doesn't sneak up behind you). Use the Detect Life scrolls (or the Detect Life spell if you have it) to see him; if you have the Aura Whisper shout, this can also be used to reveal his location. If you have the Slow Time shout, use this when he appears in front of you and he can be taken easily if you are leveled high enough. Once Mercer dies, a pipe at the top of the room will burst, flooding the room.

Take the Skeleton Key and the Eyes from Mercer's body, and wait for the water to rise. Once it gets high enough, a hole will appear in the roof above the statue's head. Run out through the short passage to escape. This takes you to Bronze Water Cave; if you had a follower, this is where they will be waiting for you. You can give the left eye to Delvin for gold as part of The Litany of Larceny; the right eye can be kept or sold to a merchant.

Talk to Karliah to complete the quest, and she will give you her Nightingale bow.

Notes
In the room after you have to choose the "high road or low road", after descending the ramp with the bear traps you can find an open door on the right side. There are three empty chests of the two different dwemer chest types, a few scrolls to pick up, and a note scratched into the metal door. Written backwards, the message reads "one step ahead -Mercer".
One easy way to end the battle quickly and effortlessly is to climb up to the ledge behind the statue. When Mercer comes to you, use Unrelenting Force to blow him off the ledge; a fall from this height will kill him instantly. Using a spell effect such as fire will make him easier to see while invisible.

Bugs
 
 
Reloading a previous save from before entering that zone should resolve this.
 
 Use the console commands   and then  . This way you can talk to her and continue the quest.
Alternatively, you can try swimming and bumping into Karliah repeatedly to knock her into the correct path and out of the water, at which point she will continue normally. This may take a while, so it is a good idea to have a waterbreathing enchanted item with you to prevent drowning (if you are not playing as an Argonian).
Another option is to shoot her with arrows when she is in sight from the land. She will run up at you. If you have a potion of paralysis, paralyze her when she is on land. Exit and come back.
 
To solve this, go out to one of the beds at the start of the dungeon, "sleep" in it, and the game will ask "Serve your time in jail?" Click yes and you'll appear outside of the prison you broke out of. Now you can return and loot the corpse.
 
 Use the console command   to fix this.
 You can also use command   and then   to move Mercer to your position and fall down off the ledge, then he will automatically go back to his correct position on top of the statue. He will then continue to cast a spell making the ledge crumble and will speak to you.
 
 Use the console command   to fix this.
 
To fix this, simply go through the dungeon yourself, and they will appear in the Sanctuary once you get there.
 
One known fix is to restart the console and reload your last save.
 
 
 

Quest Stages