The exact order and details of the events in this session are a little bit sketchy, because it happened months ago. However I've tried to make the post coherent as well as including important information, even if it doesn't follow the actual events perfectly.
The party makes its way to Cyneburga at last, travelling by road or Nikolai's skiff (which is propelled by what appear to be living rag-dolss). The city seems to be diminished by the swelling population of refugees within its walls. Its architecture, rumoured to be uplifting and majestic, seems instead to be crumbling and oppressive. The only thing unaffected by this atomosphere of doom is the Adamantium Sentinel, said to be part sclupture, part divine guardian.
Aside from their lodgings at the guardhouse, there are a few other locations that the group begins to familiarize itself with. They pass by the warded, plague-ridden Red-Door district on their way to check up on Jaromill at the reclusive elven sanctuary, and speak to the secretive monks at the temple of Pelor- a once inspiring cathedral that has fallen to near-ruin. They also meet with Mads Lengkin, who protects the slums and promises to help find Glerothaine's family; Grethe, an alchoholic agent of Nikolai; and the highly eccentric "Masks"- merchants of magical wares that patrol the city in a hut supported by chicken legs and that is bigger on the inside than on the outside.
Nikolai sends the group on his first task- infiltrating the manor of his former rival, Lord Grey. Though Grey himself recently died under mysterious circumstances, someone seems to be carrying out the vendetta in his name by attacking Nikolai's servants.
However, before they can reach the manor, they are accosted by a group of orange-robed humanoids, who demand that the warriors stay away from the temple of Pelor. Why they thought this would work is uncertain (they don't seem very bright), and a fight breaks out when they attempt to delay the adventurers further. The Orange-Robes put up a good fight, showing remarkable flexibility and the power to erode weapons and armour. However, they soon crumble to rust themselves at the blades and fists of the warriors.
Entering Grey Manor through the ubiquitous aqueducts, and avoiding a clockwork sentry placed by the city's rulers, the party finds that it is Grey himself orchestrating the attacks- and is revealed to be an ethereal undead creature after a futile attack from T'sabo and Esper. Seeing that they are not particularily loyal to Nikolai, he lets the warriors off with a warning, and they return to the city streets…
...But not alone. A floating, tentacle construct has been following the party, and attacks when it is discovered, attempting to flee with several party members in its grasp. However, it is torn apart in a brutal grappling match. Several Orange-Robes appear to be watching, but make no move to help either side of the melee.
The remains of the construct are brought to The Masks, and their examination makes it clear that the tentacled thing was created by mind flayers. The green liquid that seems to power it is a mystery, but The Masks quickly create a device that will detect its unique aura.