You should know that this one is coming from the first point when you enter the city. Dranor is in jail and you should probably free him. Once you finish up the investigation, you should be able to find Salina in the area outside the temple. Talk to her to start this quest.
Your mission is to rescue Dranor from the dungeon. Go over to the brewery and report in to Muddlemush and offer your aid. This is actually a separate quest, but we're focusing on this one for now. Your goal is to go through the first level and kill a few wolf rats. You won't fight more than 2 at a time. Once you get to the little meadow area with all of the fireflies, turn to the right. Do not go down to the second level. Follow the path to the right until you find the false wall. Open it and go through to the dungeon. Don't worry about sneaking, since the guards will always attribute any noise to the rats. Walk to the end of the line to talk to Dranor and realize that he could have easily escaped. He doesn't just want to be free, he wants to be found innocent. That's our next task.
Go back out to Ducal Citadel and talk to the marked merchant. You need to go back and forth between Merchant Harpel and his daughter until he realizes that he is really confused and that Dranor really didn't do it. You can then carry his rescind order to Barla over in the guard quarter. She'll free Dranor and he'll join the team. You can then run on over to Hamlok and confirm that Dranor is free to wrap up the quest.