He's got the wrong conversation, unless he's lying about his name and he's really a gnome.

The secrets out! Yes its true he is infact two gnomes standing on each others shoulders.

Is this a very recent thing? I was playing it the other day and the only problem with it was the fact that it says "here take this charm just incase" and you get no charm. I was informed this is a mistake and will be removed shortly.

He also gives you two quests, the troll quest AND the undead in Hoar's temple quest.

Well I can tell you for sure last night it was working fine so it must have been the last update which caused this bug.

Overwrote a conversation file, fixed.