This is a side Quest for Zavied. This quest cannot be started until after unlocking the final dungeon.
Head to Taliesin and there will be a family to the left of the fountain, down some stairs. This will activate a cut scene. After the cut scene, head to Reneed and you will find an NPC that mentions some stuff that is for sale in Port Canix. Head there and speak to the salesman in the storage room.
You will receive a book. Next head to Hellewas and speak to the guards. They will mention some exorcists wounded a Dragon outside of Meirchio. Head to Meirchio and exit the back and head to where the Crystal Code Red Daemon was. You will need to battle Zavied. Once the battle is complete head back to Reneed and there will be a bloodwing with a message from Tabitha to kill the dragon.
Head to the peak where you first meet the dragon in the main quest and defeat it. Head back to Taliesin and speak to the family to complete the quest.