1. Arx - entrance to the magisters' hideout
2. Arx - The Vault of Linder Kemm's entrance
3. Arx - Toyseller
4. Arx - The Cathedral
Speak with Malady when you reach Arx. She informs you that your goal is to hunt and kill Dallis.
Dallis is somewhere in Arx but her exact location is unknown. The answer can be found in the magisters' hideout  located under Barracks. The only way to get there is to go through a hatch.
This hatch can be opened only with the right sequence of words. That sequence is the magisters' motto. Select sentences that refer to: Mind, Body, Society, Loyalty.
Go to the lower floor and find magister Reimond. You must fight with him. After that you can look around his hideout. You can find a lot of documents but the most important one is the Journal. It contains information about Dallis' whereabouts - she is in Crypt Of Lucian that is located somewhere in The Cathedral .
You can also find two important documents that are located on the upper floor: Report Of The Toyseller and Open Report. The first document is on a desk near the entrance to the lower level. The second is located in a secret room.
You can reach it by pressing four buttons that are behind pictures. Press them in this order: Mind, Society, Body, Divine. From the documents you learn information about two characters that know about Path Of Blood. They are Lord Arhu and Toyseller.
Sadly, in order to reach Dallis you must pass Path Of Blood. The official version of the ritual requires you to answer questions asked by a statue which allows you to prove that you are pure. None of the answers is right which means that you can't complete this ritual in that way.
You must find another way to reach Crypt Of Lucian. Lord Arhu knows the answer. Sadly, he is imprisoned by Linder Kemm in his private vault .
You must go there and save him (more details in the description of The Vault Of Linder Kemm quest). Kill Linder Kemm. After that you can speak with Lord Arhu (or his spirit if he died during the battle). He tells you that Toyseller is the creator of Path Of Blood and that he has tools that can open Crypt Of Lucian.
Visit Toyseller . You can find him in one of the shops near the bridge to The Cathedral. Speak with him and inform that you saved Lord Arhu. He will tell you how to pass Path Of Blood. He also gives you Source Amulet and a password to a locker on the upper floor that contains Scroll Of Atonement.
Take these two items to The Cathedral and head to the main chamber. Pilgrim was here before you but he will die very quickly. This opens the door. Inside, you must equip one of your characters with Source Amulet and use Source Vampirism to charge the amulet.
Then, interact with a switch on a wall. Put the charged amulet there. Your character will read Scroll Of Atonement automatically. This opens a hatch.
In Crypt Of Lucian you can find an altar and a grate on the ground. The first thing that you must do is to drop a little bit of blood on the grate. You can do that by using Blood Rain, Flesh Sacrifice or inflicting Bleeding status on one of your characters. Then, you must approach the altar and select the second dialog line. This opens a control panel for the board below.
You must arrange three paths in a such way that they would reach the right places on the other side of the board. An example is presented in the picture below.
After creating the paths, you must use Bless on blood that you dropped on the grate. This opens a secret passage.
You are in a hallway that leads to doors. Going through them means that you won't be able to return so be sure that you have completed all side quests.
You reach a room full of traps. The room is also filled with Source Puppets that will attack you. In the beginning, you should use ranged attacks because the Puppets are close to each other. Later, you can use Source Vampirism and kill them instantly.
After that you must eliminate a barrier that guards a passage. You must pull levers that bear the initials that spell POWER. This allows you to proceed to the next room.