There is so much confusing, outdated and wrong info here its making my head hurt. So, here is a summary for both "Law of the Order" and "Shadows over Driftwood" on DE(!)
1. Make sure you have "Letter from the Dwarven Queen" and "Letter to Mordus"
2. Go to Lohar, and hand in the "Letter to Mordus" (2000XP)
3. Confirm you have killed Mordus and hand over Mordus' amulet (2800XP)
4. Exhaust all dialog options about Deathfog and Source teachers. DO NOT give him the Letter from the Dwarven Queen
5. Head over to Magister Julian but leave one of your characters in the room with Lohar to prevent the guards to wander of. Hand over the Letter from the Dwarven Queen to Julian. He will ask for Lohar's head.
6. Go back to Lohar. If you have Beast in your group unchain him and leave him somewhere out of sight.
7. Lohar will automatically give you a dialog option to start a fight with him "I know you betrayed me yaddah yaddah...)
8. Kill Lohar and his guards. (8000XP from 3 guards and 1 prisoner; 5000XP for finishing Lohar) Make sure that no aggressive action happens outside the room (i.e. do not range attack the guard at the door). The rest of Undertavern will turn hostile but will not engage as long as all the action happens inside Lohar's room. (Note: There is a comment somewhere that states that killing Lohar yields 5000 + 6000 XP but I have never been able to replicate the additional 6000XP)
9. Get Lohar's head. And don't forget there is a safe behind the painting with more loot.
10. If you have not done so already, make sure you have the quest "Fishy Business" and have found the source weapons in the basement of the fishery.
11. Back to Julian. Do not mention the smuggled source weapons and just hand in Lohar's head (12000XP). If you haven't found the source weapons yet or mentioned the source weapons to Julian you will only get 9000XP at this point.