Eschalon II Pacifist Run - Wolfsbane Magicks & The Lycanthrope (optional)

Warning: This optional section is full of spoilers, and can be skipped easily if you prefer to stick to a purist pacifist challenge run without indirectly causing the death of a single monster.

Wolfsbane Magicks & The Lycanthrope
When you reach the Wolfsbane Magicks shop in Everdale and meet Harpen (the proprietor), you may have also already received the quest "The Lycanthrope" from Xed in the Western Kessian Basin. (If you didn't get the Lycanthrope quest yet, also see the "JOURNEY THROUGH WOLFENWOOD" section.)
Xed the Lycanthrope Hunter
When you got the quest, Xed will have told you that after tracking the Lycanthrope down and investigating its killings, he finally identified the murderer as Harpen, the magick dealer who owns and runs the "Wolfsbane Magicks" shop down the road in the middle of the village.
Xed also suggested that you immediately attack Harpen without even talking to him first, in order to take him by surprise. However, if you disregard Xed's suggestion and talk to Harpen without raising the issue of lycanthropy, you'll have the option of doing business with Harpen as you would at any other magick shop, and buying his revolving stock of potions, scrolls, rings, and other magical or alchemical items.
On the other hand: If you challenge Harpen by choosing the dialogue options involving lycanthropy, Harpen will protest and tell you that he is innocent. If you mention meeting a man who was tracking Harpen and identified him by name as the lycanthrope, Harpen will ask you if the man was "a bit odd looking, with shifty eyes" and went by the name of Xed.
Harpen's side of the story
Harpen will then assert that Xed is the actual lycanthrope, and that he tracked him down to a den in Wolfenwood, which he burned to the ground with magick fire. (If you took one of the sidepaths off the road through Wolfenwood, you may have found the ruin of a rocky den fitting this description.)
Unfortunately, however, Xed managed to escape, and now avoids entering the forest out of fear of Harpen.
Harpen will then say that Xed obviously wants him dead, but isn't powerful kill him himself, so apparently tried to trick you into doing it. He'll then offer you a bounty of 500 gold to go kill Xed instead of him, and you'll face a choice of whether to accept this offer, accuse and attack Harpen instead, or state that you can't decide who is telling the truth (and abandon the quest).

The truth is: Harpen actually is the lycanthrope, and if you persist in challenging him, he will prove this by transforming into a huge "Dire Wolf" and attacking you.
The lycanthrope fills the doorway to Wolfsbane Magicks after transforming
At this point, you won't be able to resolve the quest without some type of violence taking place:Some of us skipped it to avoid this, but one player found that the lycanthropic Dire Wolf could be led on a chase all the way out of the village and over to the ruins inhabited by the equally hostile Sentinel Stalk (which the inn owner Travet asked you to get rid of for him).
The lycanthrope chases a mage northeast of the village of Everdale toward the ruins
Using invisibility and haste potions made it fairly easy to hide from both monsters so that they turned on each other instead, causing the lycanthrope to destroy the Sentinel Stalk after a short battle between the two.
The lycanthrope dispatches the Sentinel Stalk
The lycanthrope then chased the player back to Everdale again, where the player let the non-pacifist NPCs from the village dispatch the monster (which was low on hit points by that time).
Ara dispatches the lycanthrope after a chase back to Everdale
Indirectly causing the demise of these two monsters would enable you to pick up the lycanthrope pelt Xed asked for as proof of the lycanthrope's death, stop by the Wolf's Den Inn for Travet's reward of 75 gold and 350 experience points for completing "A Weed in the Bathhouse," and then travel back through Wolfenwood to Xed's camp in the Western Kessian Basin to claim his promised reward of 400 gold and 500 experience points.
Xed pays out the promised reward for bringing the lycanthrope's reign of terror to an end
Xed will be grateful to you for this. However, as far as we know, even though Harpen was the lycanthrope, he still won't ever get around to murdering anyone else in the village (or elsewhere) for the duration of the game. This means that if you want to avoid involving yourself in the destruction of one or both monsters, you can let Harpen remain at large inside "Wolfsbane Magicks," where you'll have the option of transacting with him to buy or sell magical items for as long as you want (provided you don't ever accuse him of lycanthropy, which would cause him to transform into the Dire Wolf once again).