The Ghost Ship of Anvil
While you're heading for the Flowing Bowl or otherwise engaged in Anvil's harbor district, take a while to do some exploring. You'll run into Varulae on the deck of one of the ships in the harbor. The ship was supposed to bring back her mother's crystal ball from Summerset Isle, but all of the crewmembers have been murdered and she can't get to it because the ship is haunted. Would you be so kind?
Once you agree to retrieve the Crystal Ball, Varulae gives you a key that lets you enter the ship. Start with the Captain's cabin and work your way down. All of the crew members are dead and in their place you'll encounter five "Spectral Sailors". The spooks are one level below you and each has a Sharpened Steel Cutlass, but otherwise they behave as normal Wraiths. You'll find one in the Captain's cabin along with 100 gold, a jade necklace and a leveled enchanted jewelry item in the captain's chest.
You'll find two more spooks on the mid-deck and the final two on the lower deck. You'll also find Varulae's crystal ball in a chest near next to the ladder and some miscellaneous loot in another chest. Head back up topside and deliver the crystal ball. Varulae gives you "Redwave", a cutlass with a leveled Drain Health enchantment and thereafter you can find her at the Count's Arms Inn.
So what actually happened to the crew? You won't find out unless you join the Dark Brotherhood and complete the "Following a Lead" quest. In that quest you'll find a diary with an entry telling how the killer, in response to an insult, snuck onto a ship one night and slit the crew's throats.