As you enter the basement and open the first door you will encounter the first kobold. Use stealth and attack with ranged if necessary.

Opening the second door leads to 4 more kobolds. Use stealth and ranged attacks to bring them to you one at a time.

The final door brings five more kobolds. Again, use stealth and ranged attacks. The last kobold deals fire damage from atop a ledge. If you remain in the doorway you can target him and hit him with ranged weapons or spells, yet the landscape prevents his attacks from hitting you. Once you have killed the final kobold, ascend a ladder to the ledge to find a chest containing Aida's necklace (optional exp).

Descend the ladder into the pit and examine the altar. You will be told to escape from the shrine, but you may stop and use the rest shrine if you haven't already.

As you attempt to escape, a sealed door will open and Jacoby Drexelhand, the Madman, will spawn. He hits harder than the kobolds but does not use spells. Kill him, and proceed out of the tunnel to safety.