The unicorn quest is properly bugged, you can't leave Tungsinn and come back (because the game would crash) but apart from that there shouldn't be anything wrong with that island.
The wife tells you do destroy the necklace, you fight her husband, then things sort of unravel on their own.
The strange thing was - right across the tent with the bad husband there's a fortress with some orc dude guarding it. You can't talk to him, there's no quest tied to him and when you beat him all you get is an empty castle. Weird.
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