"Foxed by the faeries"? I don't really get it.

I'm in line with the "Maybe not" portion of his comment; I don't understand what the joke might be either. Sorry, I'm of no help here.

I don't think it is some joke here, it is just NPC trying to be fun.

Foxed by the Faries - fooled by the faeries.

I am not native English speaker, but according to Urban Dictionary, foxed apparently has some other means, like one certain swear word. Being f***ed by the Faeries in this way can indeed be hilarious for some. Well, I dunno.

Well foxed also means drunk, the question is have you encountered faeries already? What prompted this joke? That maybe might explain it.

Yeah, kind of depends on the context, from the dictionary:

foxed adj.
Discolored with yellowish-brown stains: "Their set of George Eliot was foxed and buckled by the rain" (John Cheever).
[Perhaps from the color of foxes.]

In Japanese history there is also the talk about fox ghosts possessing humans, so it could also be intepreted as "bewitched".

Edit: Also - FOXGLOVE: The name "foxglove" came from the words "folk's glove." Folks referred to little people, or faeries. One legend says that faeries gave the blossoms to foxes to wear as gloves so they would not get caught raiding the chicken coop. According to another legend, if you picked foxglove, you would offend the faeries. And if the faeries stole your baby, the juice of the foxglove would help to get it back. In some stories, foxglove appears as a faery's hat. Foxglove can sometimes heal and sometimes hurt. It is a poisonous plant, but it is also used as medicine to treat heart disease.
Source: http://www.afaeryhunt.com/fairyfun.htm

Edit2: http://www.witchipedia.com/herb:foxglove

I was always told the "foxed" comes from ferric oxide (responsible for rust). But after some checking it turns out the origin of the word is not definately known.

The foxglove explanation is quite good actually. But the way the joke is written makes it sound like it's an obvious pun. Like "The bike is slow because it's two tired. two tired? get it?" The foxglove legend connection is a bit too far fetched.

Maybe the whole point is that this Sower fellow is a bit crazy and sees jokes where there are none.

I've always assumed "foxed by the fairies" meant you were fooled by them. Since he says that before you complete the quest. I won't mention why due to spoilers if you haven't done the quest yet.

The point is that the person who wrote the joke is simply not funny. There is only one meaning for 'foxed' in that context, and it's 'fooled'... and also not funny.

I vote for the Urban Dictionary explanation. The near pun of Foxed and ______________. He is a bad guy after all.