Unlocking the quest
You can unlock this quest during the main quest [The Tears of the Mountain]. Right at its beginning you'll meet Karn, in the north-western part of the [Stonefather's Vale]. Select Assistance... in the conversation. The Ancient will ask for your help in retrieving a certain piece of headwear from the Drenchfort.
Find Karn's Helmet
The item you're looking for is Karn's Helmet and you can find it during a visit to the [Drenchfort] as part of the main quest [The Tears of the Mountain]. In the initial stage of this quest you'll be exploring the eastern part of the fort. Find a single south room where you battle, among other things, an Earth Crag. When the fighting is over, take the Helmet off one of the tables.
Bring the Helmet back to Karn
It's best to start looking for Karn only after completing the main quest [The Tears of the Mountain], which is after leaving The Drenchfort. You should find him at the site of another main quest, [To Move a Mountain], namely by the entrance to [The Lost Temple]. Talk to him and select Here is your helmet... The rewards are: 219 XP and 1200 gold.