You must be at least 3rd level before you will be offered this quest. At some point after checking on Nulfaga, you will receive a letter from Queen Aubk-i asking for your help again. She wants you to retrieve some letters from the Dowager Queen's castle. Confusing, huh? Daggerfall is blessed with two Dowager Queens. Nulfaga, who is Lysandus' mother, and Mynisera, who is Lysandus' widow and King Gothryd's mother. OK, genealogy out of the way, let's get on to the Quest.
The dungeon is supposed to be random, but the system tends to favor Castle Necromoghan in the northeast of Daggerfall province. The location of the letters is random within that dungeon, but the game tends to prefer a couple of standard locations within Necromoghan. Rather than put up pictures of the whole dungeon (I don't have unlimited webspace), I will walk you through the few quest object locations in the dungeon (it will make your life easier when you have to go back there for Guild quests).
From the entrance, with the entrance at your back:
Face right, go down the corridor (bad guy a little farther down), turn at the corner and go up to a room with a hole in the floor (a couple of critters in this room and a couple of treasure piles). Pull the lever and catch the elevator up to the next room (four critters in this room and four or five treasure piles). This is the first quest object location -- if the letters are here they will be in the back corner of the room.
Standing on the elevator and facing the lever, go out through the door to your left, turn left and follow the corridor (do not go through any side doors). There will be two critters at the first ramp going up and two critters at the next one. There are none at the third, but there is one critter around the corner from the top of the ramp. At the end of the corridor is a door that opens into a room with seven cells off of it (two on each wall except the one you came through). There is a critter in each of these cells and if the critters are capable of opening doors, they will come out to get you. There will be four or five treasure piles in the middle of the floor and one in a room in the back-left cell. Opening the middle treasure pile will cause the entrance door to close (don't sweat it). Also in the back-left corner is a lever on the wall. I don't know what it does, but I always pull it, just to avoid coming back. The letters may be in one of the cells (this is the second quest object location).
Go back to the entrance. Again, with the entrance to your back:
Go through the door in front of you. When you get to the hole in the floor, pull the lever to get the elevator up. Ride it down (there are a couple of critters at the bottom, so jump off the elevator as soon as your head clears the ceiling of the room). Standing on the elevator and facing the lever, go through the door to your left and down to the end of this short corridor. There will be a door on your right and a secret door on your left. There is a critter behind the door on your right and this is the third quest object location. Go back and take the elevator up, continuing down the corridor as before.
When you pass the four-way intersection, there will be a secret door to your right. There is a critter behind it and, if it's capable of opening doors, it will try to get you. Look at the ceiling of the corridor and you will see an opening right above a pile of bones. Climb the wall or levitate through the opening. There is a treasure pile in front of you and this is the fourth quest object location. Drop back down to the corridor and go through the door at the end.
Ahead of you is an opening to the left with some tree trunks showing. Take that opening and follow it around (the door with the critter behind it is locked, so nothing will come out). There will be an opening in the ceiling and one in the floor, just past it. Levitate up through the opening and keep going in your original direction (there will be a door in front of you). There is a critter in the room behind this door that will try to come out to get you. Go around the corner and you'll see a door to your right. There is a critter behind this door that wants to eat you. Go around the next corner and you will see a pit with a skull on the wall. Don't drop down into the pit unless you want to have all of your magica sucked out of you (there's a critter in the pit, but it can't get you unless you jump into the pit). Click on the skull and it will move. Now go back to the hole and drop back down.
Drop or levitate through the hole in the floor and you will find yourself on top of an altar on a raised platform. There will be a critter off to the side and three doors in front of you. If the critter can fly, it will come get you. If it can shoot arrows, it will. There are a couple of critters at the bottom of the platform. You can go kill them if you want. Levitate (or jump if your skill is high enough) or climb to the wide ledge where the critter was/is and dispose of it. Go through either of the two doors in the back wall and you will be in a room with eight doors (all locked) and a four-armed statue. Clicking on the statue will open the six doors that have critters behind them. The best practice is to use your bow on them before clicking on the statue. In the back-right corner is a cell that has a secret door in the back. This leads to a small room with 2 treasure piles and is the fifth quest object location. Go back up the hole and back to the opening above the pile of bones (the fourth quest object location).
At the back of this short corridor is a shaft leading up. Climb or levitate up this shaft. You will enter a room with a torture device, two doors and a treasure pile. Behind one of the two doors is a small room. This is the sixth quest object location and it also has a treasure pile.
Open the other door and you will see a corridor with a pit. Jump the pit and go through the door at the corner. There is a critter at the top of the ramp in front of you. Go past the T-intersection to the door at the bottom of the ramp. On my system this door is very flakey and I can't open it. But the critter(s) on the other side usually can. In the closet in this room is the seventh quest object location. Go back to the T-intersection you passed earlier and turn right.
Go through the door at the end of the corridor and turn left. Go around the corner and up the ramp (there will be a critter near the top). Go past the T-intersection to the door at the end. There is a large room with two critters in it. One will be near the door and the other will be near the bottom of the ramp. There is also a door at the bottom of the ramp. Go through it and you will see an open trapdoor (remember that skull you clicked? It opened the trapdoor). Drop or levitate down (use caution here because there are a couple of critters at the bottom and it's very easy to land on top of one or both of them). At the bottom you will see a door that opens into a small room. This is the eighth and last quest object location (and the most probable location of the letters). There are also two or three treasure piles in here.
If you have not found the letters, you have a bug and need to follow the directions for dealing with missing quest objects in the Questing section.
To get back out (assuming you did not anchor a "Recall" somewhere), go back to the door at the corner that opened into the corridor with the pit (the one you jumped over). There is a steep ramp going down (and there may or may not be critters at the bottom, depending on whether you disposed of them earlier). At the T-intersection at the bottom of the ramp, turn right, go through the secret door to your right and out the door on the other side of the room (there may or may not be a critter in the room, depending on what you did earlier, but there is a treasure pile in the stone coffin). Turn left as you go out the door and go straight until you get to the entrance.
Once you return the letters to Aubk-i, she will "tut-tut" about the orcs and tell you that Lysandus had a mistress. She will also give you a pat on the head and something for your troubles. This will probably be the last time she will talk to you because I just can't get her to generate quests other than these two.