unable to complete "what lies beneath quest" help

SO i have spent the last week trying to figure out how to complete this quest, MOSTLY what evidence i am missing in game would have been great help. having tried to dig what fledgling information i could from this site i have given up and am asking for help.

having followed every step and little hint of info i could find in game and here i'm not sure what to do.

i really wanted to finish this quest at least once, so i followed all the steps in the guide to start with.

currently i have one piece of evidence "fact finder level 1" which would be the child's locket i took from the bad guy. this was the last thing i did in the quest. i have charmed, feared, sleeped and found everyone and saved the kids. but this was not enough.

also i have escapee in my party and cannot seem to turn him over to the authorities, am i just talking to the wrong people?

I've
also tried talking to the gnome in the castle of the lord but he has "NOTHING" to say in regards to this.
i'm wondering if i did the quest in the wrong order or if its a bug.

 

It's a long time since I have pursued this quest, but I have completed it. If you have read up on it on this site, you will be aware that (spoilers)

Spoiler

there's a random element to who the bad guy is in this quest, and that the 'lost children' disappear once you get above ground because they are ghosts. I can't recall exactly what the requirements are to complete, but it does finish in a slightly odd way with the watch commander not quite believing in you. Can be done, though. As far as I recall, the gnome doesn't help with this quest at all