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The Elder Scrolls III: Morrowind Hints
Fargoth's Ring
1 of 4: Talk to Fargoth about the topic "ring" to get this quest. He's the Bosmer (wood elf) wandering around in the center of the village.
2 of 4: You will already have his engraved healing ring since the game forces you to raid the barrel that the ring is in before you enter Sellus Gravius' office.
3 of 4: Give the ring to Fargoth. Your reward will be that Arrille (the local merchant) will be much more friendly to you, making his buying and selling prices better.
4 of 4: And don't worry about how useful the ring might have been to you. You can get it back by doing the "Fargoth's Hiding Place" quest.