Looting the Mist

The item you need is dropped from a Wretched Soul, a named mob found near Millrush Pond next to a cottage where a dwarf merchant (fisherman) is. These zone is full of Tormented Souls, if the named doesn't appear kill some of them to force its spawn. (Dropped of Balemouth same spot same mob type)

This quest counts towards the Trophy Hunter and Gloamwood Samaritan achievements.