Shidan

Major
102 Badges
Aug 30, 2013
507
4
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Courtesy of Beast6578 over on the Steam forums.

If you pick up the Rainbow Dragon spell from a deal with another Great Mage before acquiring it through the quest, it breaks the quest and causes it to be incompletable. According to Beast6578 the witch won't show you to a lair to retrieve the spell, and casting the spell won't cause quest completion.