Merlin's Crystal

Starting Up
To begin the quest, talk to King Arthur in his castle of Camelot (ground floor). Ask him if you can join the Knights of the Round Table, and he'll suggest you complete a quest first to prove yourself. He'll tell you that his friend and mentor Merlin has been trapped in a crystal by Morgan Le Faye. While they did manage to find him and bring him back to the castle, they haven't quite figured out how to release him. Arthur will tell you to ask the other knights if you need any help.

Gathering Info
Go talk to the knights around Camelot. You should first ask Sir Gawain about how Merlin got trapped. He'll either be in the same room as King Arthur or directly south in the courtyard. He'll tell you that Morgan Le Faye might know how to release Merlin (since she's the one who put him in the crystal), but that Keep Le Faye is all but impenetrable.

Next find Sir Lancelot (upstairs on the first floor of Camelot) and ask him if he has any idea on how to get into the Keep. He'll tell you that he reckons that the only way to get into Keep Le Faye is by boat.

Infiltrating the Keep
Now that you've got a lead, head down the road south to Catherby (or use the Lodestone Network). Arhein will be on the dock just south of the bank. If you talk to him, you'll quickly find out that he does, in fact, sail to the Keep to deliver goods. He's not about to let you hitch a ride, though.

Since he's so adamant about it, you'll have to find another way. Grab some armour and go up between the bank and the candle shop where you'll find a few crates. You can click on the large one to slip inside and hide. There will be a bit of dialogue as workers come to pack you up and put you in the boat. After a while you'll be dropped off at Keep La Faye, at which point you can climb out. (Warning: Do not alter your state in any way (e.g. wield an item) or the conversation will end and you will have to go through the conversation all over again!)

Ritual components
Now that you've arrived, enter the Keep and climb the stairs to the top floor, where you'll find Sir Mordred (level 39). Talk to him and he will attack you (WARNING: Try not to use prayer during the fight as if your prayer runs out right when you "kill" Sir Mordred you will have to fight him again). Just as you defeat him, Morgan will appear begging you not to kill her son. In exchange for sparing him, she will finally tell you how to release Merlin. You will need a number of things to do so:

Bat bones
There are bats right outside the Keep. Just go out the other door on the ground floor to get outside and kill one.

NOTE: If you are doing the quest Rag and Bone Man, bats will also drop Giant bat wings. These will not work for the quest, only the normal bat bones will.

NOTE: If you are a skiller/skill pure, you can simply buy the bat bones from the Grand Exchange or from another player.

Black candle
Return to the Candlemaker in Catherby whose house is just west of the Catherby bank. Talk to him and he'll tell you that black candles are traditionally very bad luck to make. Coax him into giving you one and eventually he'll agree—if you will bring him a bucket full of wax.

In a house just north of the bank you can find a bottle of insect repellent on a table. Take it and head to the west to the fenced-in area full of bee hives and a flax field. If you don't have a bucket, grab the one that spawns right next to the gate by the beehives. Use the insect repellent on any hive to temporarily drive the bees away, then use a bucket on it to get a bucket of wax. Take this back to the candlemaker to get your black candle. You can use the drop-trick here, and, assuming you have more buckets of wax, you can obtain multiple black candles.

Excalibur
Excalibur is kept by the Lady of the Lake. She's located on the peninsula southeast of Taverley, around the lakeshore and just past the balloon travel point. Use the lodestone network to get there. Talk to her and she'll tell you that she has the sword, but that she first wants you to go to the jewellery shop in Port Sarim.

If you don't already have one, grab a loaf of bread from the food shop (just south of the Port Sarim lodestone) then head north to the Jewellery Shop. As you open the door, a beggar will approach you and ask you for some food to feed his starving family. Give him the loaf of bread. When you do, the tramp will change into the Lady of the Lake, who was simply testing the purity of your spirit. Now satisfied that you are worthy, she gives you the sword Excalibur.

Magic Words
Go to the Zamorakian church in Varrock, located south of the eastern Bank and Aubury's Magic Shop. Right click to check the altar. The inscription on it reads: Snarthon Candtrick Termanto.

Note: You must complete this step yourself or you will not be able to complete the ritual.

Freeing Merlin
Go back to Camelot (don't forget to take a tinderbox with you; the Dwarven army axe will also work). Head to the northeast corner of the castle grounds (outside the castle, but inside the fence). You'll find a small stone gazebo with eight columns. Inside, on the ground, is a twelve pointed star. Light your black candle (don't drop it!) within this structure and drop (DO NOT BURY) the bat bones here. A ghost named Thrantax the Mighty will appear and you will be prompted to say the magic words. The magic words are Snarthon Candtrick Termanto. If you get it right, the ghost will obey you and disappear. If not, he will attack you and you'll have to try again. Be careful, though, as he is level 92 and can hit in triple figures. If you fail, simply stand in the middle of the twelve pointed star again and drop the bat bones.

Once the ghost is under your control, you can ask for it to free Merlin from the crystal and your request will be granted. Now go back inside Camelot and from the southeast corner of the ground floor climb to very top of the tower. There you will find Merlin imprisoned in a blue crystal. Smash the crystal to release him (you don't need to have Excalibur equipped, but it must be in your inventory).

Head back downstairs and talk to King Arthur. He will grant you honorary Knightship in the Knights of the Round Table. You have finished the quest. Congratulations!

Rewards

 * 6 quest points
 * Excalibur
 * A replica of Excalibur will be placed in the Varrock Museum as a Varrock Museum display by talking to Historian Minas. This will give you 5 Kudos and a lamp for 1,000 XP (can be used on a skill at least level 20).
 * 2 extra spins on the Squeal of Fortune

Music unlocked
None

Required for completing
Completion of Merlin's Crystal is required for the following:
 * Heroes' Quest
 * Holy Grail

Trivia
Merlins Kristall Merlin's Crystal Merlin's Crystal Merlin's Crystal
 * The quest was once a requirement to teleport to Camelot, but this was changed due to lower levels dying at White Wolf Mountain.
 * Upon completing this quest, one's Adventurer's Log will read: "Merlin was trapped in a crystal by Morgan Le Faye, but I freed him using an ancient spell. I am now a Knight of the Round Table."
 * This quest at one point was not able to be completed by skillers due to an update that forced players to wield the sword to smash the crystal, due to the smash option skillers are now able to complete the quest again.
 * Upon talking to King Arthur for the first time, he says 'Back in England, Merlin got himself trapped...' This is the first time a quest incorporates a non-fictional country into the game.
 * If you try dropping the bat bones in the gazebo after talking to Thrantax the Mighty, you won't drop them, but it will say in the chatbox "You can sense a powerful presence here."
 * Despite its low difficulty, it rewards 6 quest points, the only quest in Runescape to do so and give the 2nd highest quest point reward, only surpassed by Recipe For Disaster, which gives 10. This is most likely because the quest points are the only reward from this quest, minus Excalibur.
 * While using an Orb of Oculus inside the crate, you are able to find an empty version of the crate and partially see a cave with lava flowing in it.
 * If two players smash the crystal that merlin is held in at a near enough time, 2 merlins will appear in the tower.