Find an earring by turning right on the first bridge and following the trail down. Before you get to the stone walkway there is a turnoff just past two sentries. (The earring is very small, but has a bright color. ( -41, 25, -795 ) /waypoint -41, 25, -795
Return to Teriniu
You tell him you'll gather some companions and get more evidence.
Find the body of a dead female elf in New Tunaria on a rock in middle of water ( -765, -2, -1202 ) /waypoint -765, -2, -1202 and hail her.
If you can't see the corpse, despite the presence of an update icon on the map, type "/tar a dead elf" and press the Enter key. You should see "a dead elf" appear on your target and hailing should update your task (at least that's what worked for me)(If you still can't see the elf type /hail and press the enter key, this should update your quest).
"/tar a dead elf" works on the Rock, not in the lake water.