Oblivion:Liberation or Apprehension?

Quick Walkthrough
# Speak to Arch-Mage Traven who tells you to find Mucianus Allias and some Battlemages at Nenyond Twyll.
# Once you arrive, talk to Fithragaer - the only Battlemage remaining.
# Explore Nenyond Twyll until you find Mucianus Allias, who has been turned into a unique zombie called a Worm Thrall.
# Return to Traven with the sad news concerning Mucianus.
# Go visit Raminus for advancement to Warlock.

Detailed Walkthrough
The Name's Allias
Speak to Arch-Mage Traven after completing Necromancer's Moon. After he gives you a little speech about how you've shown great promise and such, he'll get down to the business of your next quest. It seems that in their efforts to gain information about the Necromancers, the Mages Guild has enlisted Mucianus Allias as a spy within the organization. This move has given the guild valuable information, but Traven now feels that the informant is in danger. In particular, Traven is worried that a group of Battlemages sent to find Mucianus by the Council of Mages will mistreat him or even mistake him for one of the necromancers. To prevent this Traven sends you to Nenyond Twyll&mdash;Mucianus' last known location&mdash;an Ayleid ruin to the south of the Imperial City.

Fithragaer
Once you travel to the ruins and step inside, you meet what remains of the Battlemages&mdash;namely, a Bosmer called Fithragaer. According to him, the necromancers were ready for the battlemages and ambushed them. This obviously doesn't sound like good news for the informant. Still, Fithragaer is eager to continue the fight and he tells you to follow him. This turn of events only lasts a few seconds, as Fithragaer steps onto a platform that rises rapidly into the air and impales him on spikes attached to the ceiling. The platform is on the bottom of the first set of steps, in the center of the room. Now you'll be searching for Mucianus alone. It is possible to keep Fithragaer alive, but his death is scripted, and doing so may bug the game. 

The Rest of the Ruin
After passing the trap, the rest of the quest is straight forward. Just make your way past the three necromancers and towards Nenyond Twyll Riellesel. In there, you'll find a necromancer named Mariette Rielle. Surprisingly, she doesn't attack you on sight. Speak with her if you want to, or you can attempt to get a sneak attack in first. If you do choose to talk, Mariette will tell you that Mucianus Allias has been turned into a Worm Thrall (a Zombie), and then she will attack you.

After you kill her, hit the switch on the northwest wall beyond the pool to open a nearby door. Behind the door is Mucianus who&mdash;as Mariette rightly claimed&mdash;is now a Worm Thrall. Attempt to talk to Mucianus. Sadly, there is no way to help him, so the only thing you can do is head back to the Arcane University and report what happened. Don't forget to speak with Raminus for a promotion to Warlock. He will tell you that you can now access the Council Chamber&mdash;the second floor of the Arch-Mage's Tower&mdash;freely, but in fact the chamber is accessible at the previous rank of Magician.

Notes
You do not need to kill Mucianus.  Activating him (i.e., trying to talk to him) is sufficient to update the quest.
If you cast invisibility before or during the fight with Mariette, she will not cease combat and may occasionally cast a spell in your direction, despite the fact she cannot detect you.
The two Varla Stone Cages in the main chamber of "Nenyond Twyll Riellesel" can be activated by pushing buttons located on the sides of the two sets of stairs leading from/into the water. Both cages house a single Varla Stone
  An achievement will be unlocked upon being promoted to Warlock.

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