After the battle with DeMordrey and his guards, his son will be standing off to the side. He will have the usual quest marker over head. It seems he's got no taste for battle and surrenders. He will give you the key to the dungeon under Skook's Corner.
Please...we... we don't want to do anything rash now! I mean... that would only create a diplomatic nightmare. Barons... have to stick together. I...oh, I surrender already. Here this is the key to the cellar vault. You will find what you are looking for there. Take it. Just don't kill me.
Take a walk outside and over to the iron gate which will now be open. Go inside.
Kill all the Dark Army combatants you find. Note there is a stairway going down in the back wall. Go down the stairs. Kill more Dark Army enemies and then you will face Udchathak the Beast, a ferocious demon. Defeat the demon and talk to Officer Willybald to receive the crown's thanks and your rewards.
You have proved yourself worthy of the barony. You have my utmost respect! Many thanks!
Hirelings and Escorts
This underground area is also part of the Seraphim's class quest. Given all that's going on with this quest, it might be best to hold off doing the Seraphim side quest until after you've finished this quest.