Ayleth never returned to the Convictory after you gave her the dragon fang and Margyt is getting worried. Return to Red Rim, where you last saw her, and see if she is still in the area.
You do not see Ayleth, but there are plenty of dragons, which you dispatch in short order. Continue looking for the missing girl.
There is still no sign of Ayleth at Red Rim. Return to the Convictory and break the news to Margyt.
The news worries Margyt. Where is Ayleth and what does she plan on doing with the dragon fang?