The Necromancer's Amulet
This is one of two quests that are running simultaneously ("The Bloodworm Helm" is the other). Both are straightforward object-retrieval quests, but you must retrieve both objects before you can complete the quest - no partial credit will be given.
The Council of Mages has split over how to deal with Mannimarco. The issue is not whether to fight back, but how to fight back. Caranya and her faction have stolen the Necromancer's Amulet and retreated to Fort Ontus near the Hammerfell border. The Necromancer's Amulet functions a bit differently than in Daggerfall and Morrowind. In Oblivion it has a leveled enchantment that drains your Strength and Endurance, enhances your Intelligence, Willpower and Conjuration, and fortifies your Magica.
Fort Ontus is a strange one. You don't encounter anything except non-hostile Mages. They're terrible conversationalists and will only tell you to talk to Caranya. If your Security skill is lacking, getting to Caranya might be a bit difficult because of all of the locked doors between. But there's nothing to fight, so take your time. If you need to pop back out to get more lockpicks, it's no big deal.
Caranya is in a large chamber, closed off by portcullises. Fortunately, the lever to one of them is on your side. Everything seems to be OK when you first talk to Caranya. Perhaps you'll be able to reason with her? Don't count on it. As soon as you disabuse her of the notion that you're here to join her, she does another one of those evil villain rants and goes hostile on you. On the bright side, she's unarmored, within melee range and is only equipped with a standard Necromancer packet of spells, plus a Summon Faded Wraith spell. On the down side, she's level 30 with some awfully impressive stats. Be prepared. This may take a while.
As soon as she's fish bait you'll get a journal entry telling you to retrieve the Amulet from her body and get the hell out of Dodge. At the same time, a script runs that does some fairly nasty things. All of the Mages in the Fort change into Necromancer outfits, join the Necromancer faction, lose 50 points of disposition toward you and gain 50 points of aggression. Unfortunately, they are not immediately hostile, so you may draw the unwanted attention of the Dark Brotherhood (if you haven't already done so) by just killing them out of hand. Fight your way back out of the fort and deliver the Amulet to Traven.
Traven is shocked and dismayed to hear of Caranya's betrayal, but promises to keep the Helm and Amulet secure in the tower. Talk to Polus for your promotion to Master Wizard.