Yes, it is indeed a quest.
I can`t remember the name or place, since it is a heap of names to keep track off. but i will check it and post later.

That is the questline of Enya. When you take her from verona and get her back to debir, she'll give you a quest to kill lady magnet. After you beat up her guard, she'll offer that diamond in exchange for her life. You can either take it and let her live or kill her and take it anyway.