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It's the alleged murderer of a formerly important Arx figure which has been zombified. I remembered some one-eyed man with an assassin dagger sitting in the pub, but he's not there anymore even though other people suggest the guy should still be sitting there. Thoughts?
This question / problem has been solved by ShadowWulfeimage

I remember that I had a similar problem. He comes back at some point. Just keep checking and be prepared to talk to everyone involved.
Yeah, I thought as much, heh. Though it took me a while to figure out how to buy him a beer though. I'm too damn spoiled by modern "press X to win" games. Thanks for the reply.