After a much needed night of restful sleep, the group awoke. They had breakfast down in the common room then hit the town, selling off some of the items found in the caves. Along the way they learned of reports of undead at the Old Own Well, a site two days distance from Phandalin – a man named Daren Edermath, owner of the local orchard, is worried that some old magic might be dorment there.
When they completed their deals, they went to visit with Sildar in the Townmaster's Hall. Upon entering the Townmaster's Hall, the group noticed a bounty post offering a reward to anyone who can remove a band of orcs at a site called Wyvern Tor. Inside, they met with Sildar who thanked them for rescuing him. Sildar also filled them in on what he knew about Gundren's whereabouts:
"The goblins took Gundren and the map to a place they called 'Cragmaw Castle.' I do not know of this location, but the goblins seemed to indicate it's somewhere in the forests to the north. Perhaps another goblin can be persuaded to give directions? The goblins say the goblin king at Cragmaw Castle was told to capture Gundren by order of someone, or something, they called the 'Black Widow' and whatever that is is searching for something called a 'Spell Forge – whatever that is.'
Sildar implored that the group continue searching for their mutual friend at Castle Cragmar, though admittedly had no leads other than questioning the random groups of hunting goblins. Sildar informed the group of the reason he had come to Phandalin. He is a member of the Lords Alliance, a group of allied political powers who's members ensure the safety of cities and settlements by proactively eliminating threats. Two months ago, another Lords Alliance member named Iarno Albrek came to Phandalin to help create a local guard, but he went missing shortly after his arrival. Sildar has come to not just replace Iarno, but to also ascertain what has happened to him.
After the meeting, the adventurers decided it was time to handle the obvious threat the Redbrands pose to the town, so they set forth to the Sleeping Giant Inn. Outside, a few Redcloaks we hanging around the entrance. Upon seeing Wicey, the Redbrands attacked the group. Not long after the fight began, a few more ruffians from inside came out to join the fight.
Eventually the Redbrands were defeated and the group headed inside the Inn. The interior was empty, save for the barmaid who answered all the questions asked of her, pointing the headquarters of the Redbrands to be below the collapsing mansion at the far end of the town. John made a point to tell the barmaid to go into hiding for a while.
They headed straight for the mansion and went through the front door. The mansion was empty and in very bad shape (given it's centuries of neglect). They headed into the kitchen where they found a door to the cellar which lead deep underground.
Once underground, they were ambushed by a group of Redbrands in the cellar. The adventurers fought their attackers for a short time, but John ran off into a cave opening in the side of cellar wall. When he came to the end of a tunnel, he found a large chamber with a chasm dividing the chamber (bridges connected the two sides). It was then John started hearing voices.
The evil whispering voice came from everywhere, it was talking inside his head, telepathically. The voice proved to know much about John and eventually showed itself to be a hideous one-eyed monster with a gaping maw. The creature tried to mesmerize John, but he resisted and fled the area, just as Zalanor rounded the corner to check on John.
John continued running past Zalanor back to the fight with the Redbrands, and Zalanor found himself face-to-face with the monster. The others continued the fight as Zalanor studied the monster and realized it was a creature known as a "Nothic", the result of wizards who delved too far into the weave of magic and became corrupted. The Nothic convinced Zalanor that it would share it's unlimited knowledge and mesmerized him, which Zalanor complied with.
Zalanor's mind temporarily merged with the nothic, as the Nothic began rending Zalanor's flesh, eventually Zalanor fell unconscious and began bleeding out. Fortunately, the rest of the group finished off the Redbrands and came to Zalanor's rescue by killing the creature. Meltune healed Zalanor, but Zalanor's mind had been permanently tainted by the insanity of the nothic.
Wicey noticed a small chest in the chasm and climbed into it to retrieve the contents of the chest. There she found a magical sword inscribed "Talon", which she let John have. In addition, there was a number of coins, gems, and potions.
There is still much to explore in the chambers and caverns below the mansion.