Waking Nightmare - The Elder Scrolls V: Skyrim wiki

Quest: Waking Nightmare

Reward: Skull of Corruption

Location: Windpeak Inn in Dawnster, Nightcaller Temple

Prequisites: None 

Quest Guide

1. Travel to Dawnstar and talk to the villagers and you will be informed about the nightmares everyone have been having.
2. Make your way to the Windpeak Inn and speak to Erandur.
3. Follow Erandur to the Nightcaller Temple, just outside of Dawnstar.
4. After entering, he'll ask to find a book to bypass the barrier to the location of the Skull. The book is located on the second floor of the library near the southeast end corner of the room.
5. Proceed forward and retrieve a potion which is located pass all the alchemy tables down the stairs on a shelf right next to the set of stairs you walked down.
6. Erandur will then ask you to drink the potion and make your way through the "dream" to the other side of the barrier.
7. After turning off the barrier by taking the soul gem, make your way to the sanctum and kill Veren and Thorek.
8. When reaching the Skull of Corruption, you are given two options.

Options:

• Vaermina will tell you Erandur will betray you and kill you, so you must kill him and take the Skull of Corruption.
• Do nothing and let Erandur proceed with the ritual to destroy the Skull of Corruption. Doing so activates the ability for Erandur to become a follower to you in the game.