Oblivion:Paranoia

Quick Walkthrough
# Glarthir will approach you on the street and tell you to meet him behind the Great Chapel of Julianos at midnight.
# Follow through with the meeting and he'll share his thoughts about a conspiracy against him. Glarthir identifies a conspirator and asks you to observe their movements for a day.
#Optional: Follow the person that Glarthir has identified.
# Return to Glarthir the next night with your findings:
#* If you report that they were not acting suspiciously, he'll give you 150 gold.
#* If you report that the person was indeed spying on him, he'll give you 200 gold.
#Repeat the process for two other potential conspirators.
#After the third report, if you said that they were all innocent, Glarthir will not believe you. He'll attack you and you must kill him. If you said that at least one was guilty, Glarthir will instruct you to kill the accused. You can:
#* Kill the intended targets and receive 1000 gold from Glarthir.
#* Report Glarthir to the authorities and receive 1 Fame.
#* If you accused Davide Surilie: inform him or his brother that Glarthir wants them dead and they will kill him themselves.

Detailed Walkthrough
A Disturbed Bosmer
Enter Skingrad and you will meet a Wood Elf named Glarthir, who behaves in a disturbed way. He will stop you in the street and ask you to meet him behind the Great Chapel of Julianos at midnight. The Great Chapel is contained within the south walls of Skingrad. Once there, he will explain to you that he believes there is a conspiracy against him. If you don't meet with him immediately, he will keep showing up each night around midnight until you talk to him there.

He goes on to identify Bernadette Peneles, who lives right across from his house, as someone who has been assigned to spy on his movements. Glarthir asks you to be outside his house the next morning at 6am and to monitor Bernadette's actions, warning you to not let yourself be seen by her. Glarthir then sets up another meeting with you at midnight the following day and warns you not to make any contact with him in public.

If you refuse the initial request to help with Bernadette, the quest will show completed, and he will try to work out problems on his own. He will go to his house and, after about an hour, come out with his battle axe and enter Bernadette's house, and attack her. She may run outside, and the guards will kill him. Alternatively, he may kill her inside her house or the church and exit after about an hour. Follow him and the next guard to meet him will kill him. In either case, you can search his corpse to find his house key, then enter his house to take the 800 gold in the wastebasket.

Public Opinion
If you talk to a guard after this, you can ask him to arrest Glarthir (however, they can't do anything until you receive his death note later). You can also tell him about Glarthir's suspicions; the guard will say he's "getting worse" and asks you to keep an eye on him. Apparently, his shaky mental condition is well known in the city, and many citizens will comment on how he's "having one of his bad spells" lately. You will eventually be approached by Dion, the guard captain, about your interest in Glarthir. He will warn you not to get involved with him and to report any strange requests to the guards.

More Suspects
Meet with Glarthir behind the chapel at midnight. Again, you can wait days or weeks before meeting with him. He will ask you if Bernadette is actually following him. Whether you tell him the truth or lie you will get 150 gold as a reward. If you say that you don't have enough information, he will go back to waiting and showing up behind the chapel each night until you are ready to continue. Glarthir will then ask you to follow Toutius Sextius, whom he also suspects. Again, follow Toutius around if you want to assuage your conscience or curiosity, although it is not required to complete the quest. Report back to Glarthir at midnight, and tell him what you want. If you cleared Bernadette and again clear Toutius, Glarthir will find it hard to believe that neither one is in a conspiracy against him, but he will still reward you with an additional payment of 150 gold. If however you accused Bernadette and again accuse Toutius, Glarthir will be overjoyed that he was right and will reward you with an additional payment of 200 gold.

He will now ask you to follow Davide Surilie, whom he thinks is the ringleader in the conspiracy against him. Davide is one of the two brothers who own the Surilie vineyard to the west of town. Again, follow him or not. When you report back to Glarthir at midnight there are two options. If you told him that none of the three are following him, Glarthir will attack you. ''(Note:Glarthir's iron battle axe is located on the third floor of his house. If you steal this, and then inform him (all three times) that his suspects are not spying on him, he will attack you but will be unarmed.)'' Otherwise he will give you another payment of 150 gold (if you cleared the other two suspects) or 200 gold (if you accused at least one of the other two suspects) for following Davide, then hand you a note and offer you 1000 gold to kill each of the people you told him were following him.

Assassinate the "Spies"
thumb|right|Glarthir dealing with Davide himself
If you refuse to kill them, Glarthir will go and try to kill them himself (same as if you declined him at the beginning of the quest).
If you choose to kill them, you will only need to kill the ones you picked as following Glarthir. His note tells you whom to kill, and, if you picked Davide, it will tell you to kill him first, however the order doesn't matter. 
Davide is fairly easy to kill. He should be asleep in his house right about the time you finish talking to Glarthir. With some sneaking and lock-picking you should be able to kill him in his bed without his brother noticing. The lock on the Surilie brother's balcony is average, making it an easier point of entry. He is sleeping in his house, and as he wakes up from your first strike, he shouts out, landing you a bounty of 40 gold. Guards are on patrol nearby and you'll probably get arrested right outside the door.
Toutius likes to hang around alone in a field outside of town during the day. That may be an easier way to bump him off without nearby guards.
Bernadette's killing is also rather simple. With only 90 health, a sneak attack while she is sleeping followed by a reasonably powerful Destruction spell should finish her off.
:Once you have killed everyone you are supposed to, return to the meeting place at midnight to collect your reward (1000 gold) from a very relieved Glarthir.

To take the middle road, tell Glarthir that any one of the suspects is watching him. When he hands you the note, take it to a guard. Hand him the note, and follow him to watch him kill Glarthir. Grab his house key and get the 800 gold from the wastebasket. This way you get no bounty, almost as much gold, and 1 fame point. Alternatively, you can pickpocket Glarthir for his house key, steal everything in his house, kill Davide and collect the final 1000 gold as well.
If you show Bernadette or Toutius the note telling you to kill them, they will simply ask you to inform the guards. However, if you accuse Davide and show him or his brother Gaston the note, they will attack Glarthir themselves.

Notes
If any of the targets (Bernadette Peneles, Toutius Sextius, or Davide Surilie) are killed before this quest is started, this quest becomes permanently unavailable (using the script command  , i.e., using the console to resurrect them is not enough to resume the quest).
Regardless of whether you have followed the suspects or not, waiting 24 hours after having talked with Glarthir will allow you to advance the quest.
Glarthir is one of the few non-essential NPC quest givers. You can avoid this quest entirely by killing him before he talks to you.
You can tell the guards about Glarthir's note at any point before collecting the 1000 gold, even if you have killed all of the "conspirators".
When Glarthir tells you to report to him at midnight the following day, it is possible enough time will have passed between his journey home and the chapel in order to report to him on the same day.
In Glarthir's basement, you will find some notes he wrote about his thoughts on the conspiracy. These notes will update as you progress through the quest based on the choices you make.
Bernadette Peneles and Davide Surilie each have an infinite amount of bread in their inventory. Since they will always eat their own bread (even if it doesn't show up in their inventory) you cannot use a poisoned apple to kill them. You can kill Toutius Sextius in his house with a poisoned apple after he is done riding his horse, but will need to make sure to pick up any food or drink item already in his house, and any food or drink items already in his inventory.
If you do any of the killings for Glarthir, they will count as a murder and you will get a visit from the Dark Brotherhood the next time you sleep. Conversely, Glarthir makes an ideal candidate for the NPC chosen as the innocent murder victim to initiate the Dark Brotherhood visit. Complete his three tasks, receive the note, then inform the Surilie brothers of Glarthir's plans and intercept Glarthir before they reach him. Kill Glarthir yourself (by attacking before he can initiate conversation) and you will have qualified for an innocent murder while also dispatching an NPC who was about to be killed anyway, therefore not losing any future content or quests due. You will not receive an infamy point for killing Glarthir, and The Dark Brotherhood questline will start after you sleep.
You can still kill all the spies and get your reward from Glarthir while having Gaston murder Glarthir at the same time (in order to get his house key). After killing all the spies show Gaston the note (when Glarthir is in his home). Since Gaston won't break into his house he'll just wait outside. Now fast forward to midnight and Glarthir will be moved to behind the chapel (bypassing his confrontation with Gaston). Get the money from Glarthir and he'll walk back to his house and on the way will be killed by Gaston. Now you can loot the key from Glarthir's corpse and take the 800 Septims in his house.
If you have a bounty when Dion approaches you, he will not say his quest-specific dialogue and will instead attempt to arrest you.

Bugs
 
 
 
 
 
If this happens, reload from an older save, or PC users can advance the quest through the console. 
Also, make sure he's either walking to and very near his waiting spot behind the church OR is stationary and it should auto-zoom in on him and he starts talking. Usually around 2AM he starts to leave and will make the "can't talk in public" comment.
 
The only way then to complete this quest is to turn in the murder list to the guards if you still have it or kill Glarthir yourself.
 
 
  This can be fixed by using the console command  , followed by  .

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