I think this may be a bug. I gave the Elves statue of Lionel to the Squirrels and now I seem to be unable to get it back and complete the quests, and hence unable to complete the game.

Either that or the end is a real let-down!

This really IS a bug.... sometimes, after killing some creatures, the little "corpse" icons follow me round the screen until I go through a doorway. It's unnerving!