There's actually a few mage spells you need to see the gnome merchant for. Here's the list and corresponding items needed via the textblocks:

scroll of magma blast
* pixie wings (1270) - pixie, ironwood forest, 1% drop
* pulsating heart (1271) - Thrag, Gigantic Cavern, 7% drop
* crocodile fang ...

Clarified directions:

1) Quest Requirements:
a. Required Items: pickaxe (Miner's Guild, Khazard), rope and grapple (General Store), waterskin(s) (General Store), dwarven ale (Frothing Mug Tavern, Khazarad)
b. Required Cash: 1250 Gold
2) Go to nekojin elder (Ornate Tent, Dusty Village ...

Clarified Good 3 Quest notes:

1) Ask King Kulgar (Khazard) business
2) Ask King Kulgar accept
3) Ask Loremaster Thulgraf (Khazard) demons
4) Kill Metallic Monstrosity (Dragon's Teeth Hills) and pick up the gleaming shard
4a) Note: Metallic Monstrosity drops one gleaming shard per kill (100% drop ...