Out of the Darkness  

'So we have all discussed the work you did and the effects it has had and believe we have come up with a plan to stop the growth here, keeping it from spreading to the rest of Khazad-dum.

'We have created a mixture we believe will remove the additional power the fungus-growth is giving the Orcs it has infested. Seek out Kraibag, the most powerful of the infested Orcs. Throw this in his face, and then see if piercing through the growth is easier.

'Do not worry...what could possibly go wrong? return to me when you have tried this solution.'

The dwarves believe they have created a mixture that will destroy the fungus-growth infesting the Orcs and allow them to be easily defeated.

Objective 1
Use the mixture on Kraibag
Kraibag is somewhere in the Waterworks, near The Chamber of Dark Waters, south of the Rotting Cellar.

Ansurr told you to find Kraibag, the most powerful of the Infested Orcs, and use the mixture the dwarves gave you on him to determine its effect.

Objective 2
Talk to Ansurr  at Hulwul-nefekh
Ansurr is at Hulwul-nefekh, west of The Chamber of Dark Waters.

Return to Ansurr at the Hulwul-nefekh and inform him that even though the concoction they gave you did not work, in fact quite the opposite, you still defeated Kraibag.

Once your within melee combat of Kraibag, double-click on the Oil in your inventory, then kill him.