Bloodmoon:The Skaal Test of Strength

Quick Walkthrough
# Speak to Tharsten in the Greathall who will ask you to prove your strength and travel to meet the Shaman Korst Wind-Eye on the North shore of Lake Fjalding.
# Find and speak to Korst on the Northeast corner of the lake.
# Swim to the bottom of the lake and enter the Caves of Fjalding.
# Explore the caves and enter into Aesliip's Lair.
# Find and speak to the Draugr Lord.
# Agree to help him destroy all the Frost Daedra in the cavern or kill him to acquire his ring.
# Return and speak to Korst.

Detailed Walkthrough
Tharsten Heart-Fang
In the Greathall, speak to Tharsten Heart-Fang, who congratulates you on proving your wisdom and loyalty but still asks that you prove your strength to the Skaal (see bugs). You are to meet with the Shaman Korst Wind-Eye on the Northern shore of Lake Fjalding. Head South from the village to find and meet up with Korst.

Korst Wind-Eye
Korst is actually on the north end of the eastern shore. As you approach you should notice a giant fire rising from the center of the lake. Speak to Korst, who explains the strange disturbance on the lake. Apparently, Heart-Fang believes it was caused by a Draugr Lord, Aesliip, who lives underneath the lake. Korst is less certain, and believes it is a sign of the Bloodmoon Prophecy. Regardless, you are tasked with  investigating the matter, taking care of Aesliip if required. Find a convenient hole in the ice to drop in and swim to the center of the lake to find the Caves of Fjalding at the bottom.

Caves of Fjalding
Fortunately, the cave is not underwater itself so no form of Water Breathing is required. You'll encounter the regular forms of undead such as bonewolves and draugr which you've seen before. Continue on until you find the entrance to Aesliip's Lair, partially hidden in a small tunnel.
right|thumb|Draugr Lord Aesliip
As you explore about you'll find an area habited by the Draugr Lord who will speak to you as you draw near. He will tell you the story of how he was once a mage who became draugr solely so that he could continue to support a barrier that prevents the invasion of Frost Daedra. The barrier has recently become weak and he asks for your help in driving back the daedra invaders. You can either choose to help or choose to attack Aesliip in hopes that he is merely deceiving you.

Taking Care of Aesliip
If you choose to help the Draugr Lord, he will follow you to the caverns just beyond where you first meet him. There are 10 Dire Frost Atronachs throughout the caverns; you shouldn't have too many problems taking them out with the help of Aesliip. Once the last atronach is dead, Aesliip will speak to you once again, thanking you for your help and giving you his ring, and then die. 

If you refuse to help Aesliip, he will attack you (his corpse will have the same ring that he would have given you). You can still kill all the atronachs, but you will not receive any journal entry about them when you are finished. It seems that Korst doesn't care which route you take.

Return to Korst
Return and speak to Korst along the shore of the lake who will congratulate you for taking care of Aesliip in the manner that you did. He will tell you to meet him later in the Skaal Village.

Notes
Sometimes when you complete the trial, Wind-Eye may not be in the same place on the northern shore of the lake or found anywhere else. If you go back to Skaal Village and talk again to Heart-Fang at the Great Hall about the quest and get him to repeat where Wind-Eye is located, when you go back to the lake he should have returned to his previous position.
If you accidentally attack Aesliip, he may not follow you to the caverns (or continue following you in them), and may fight you, but otherwise the quest proceeds normally. If you wish to continue with him as a temporary companion, use Calm Creature and then open dialogue with him to reset him into follower mode again.
If you fight with Aesliip, you will not be able to Soul Trap him upon his voluntary demise, even if a Soul Trap spell is active on him at the time.  If you wish to do so, and to also have his combat help up to that point, you'll need to kill him before killing the final atronach, or afterward but without initiating dialogue with Aesliip again.
Aesliip is fairly strong, but will take significant damage from the atronachs; you may wish to heal him periodically along the way, with Restore Health on Touch or Target.
As for most of the NPCs in Bloodmoon, Korst Wind-Eye's dialogue answers will change because of his new location. While he's next to the lake, if you ask him about Skaal, he will answer as if he's not part of them.
 Because of the high number of enemies in ''Aesliip's Lair, Caverns'', the frame rate drops very low in the Xbox version of the game, especially if the player goes accompanied by the Draugr Lord Aesliip.

Bugs
 
 You can make Korst spawn right where you're standing with the following console command  . Make sure you type this command when you are at the northern shore of Lake Fjalding. After he spawns, you will be able to continue the quest normally.
 

Quest Stages