Merlin's Crystal

Starting Up
To begin the quest, talk to King Arthur in his castle of Camelot. 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 just how to get him out. Arthur will tell you to ask the other knights if they have any ideas.

Gathering Info
Go talk to the other knights around Camelot. First you should talk to Sir Gawain and talk to him about Merlin to try to get some ideas about how to get him out. He'll mention that perhaps Morgan will know, since she created the enchantment. However, the Keep Le Faye is all but impenetrable.

Next go talk to Sir Lancelot, upstairs on the second floor of Camelot. Talk to him and ask him if he has any idea on how to get into the Keep. He'll say something about how the only way to get into the Keep Le Faye is from the sea.

Infiltrating the Keep
Now that you've got a lead, head down the road to the south to Catherby. 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 and you'll find a few crates against the back of the candle shop. You can click on them 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 end up in the Keep LaFaye, at which point you can climb out.

Freeing Merlin
Watch out for the Renegade Knights that are wandering around the castle and run up the stairs to the very top floor. Up here you'll find Sir Mordred (level 39).WARNING: It is possible for some one else to come in and attack him, they will not get the 'someone else is already fighting that' you will, and you will have to fight Mordred again. Fight him and 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 down the ladder on the second floor to get outside and kill one.

Black candle
Remember the candlemaker in Catherby? If not, he's in the house just west of the Catherby bank. Talk to him and he'll tell you that he can make black candles, but he doesn't stock any because it's seriously bad luck. However, you can convince him to make you some if you just get the wax.

In a house just north of the bank you can find a bottle of insect repellant on a table. Now head to the west where there's a fenced in area full of bee hives (near the flax field). Use the insect repellant on a hive to temporarily drive the bees away, then use a bucket (there is one that respawns in the field) to get a bucket of wax. Take this back to the candlemaker to get your black candle.

Excalibur
The legendary sword itself. It's kept by The Lady of the Lake. To find her, go just south of Taverley to the lake there. At the north end is a spar of land that juts out into the middle of the lake. The Lady of the Lake will be here. Talk to her, and she'll tell you that she has the sword, but first she wants you to go to the jewelery shop in Port Sarim.

Along the way, grab a loaf of bread, then head to Port Sarim. As you open the door, a tramp will approach you, begging 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. Satisfied, she'll give you the sword Excalibur.

Magic Words
Go to Varrock and go to the southeast corner of the city. In the building there (not in the fenced off area), there is a rather evil looking place with a chaos altar. On it will be the words you need: Snarthon Candtrick Termanto

Freeing Merlin
Now to free the wizard. First, head back to Camelot. On the outside of the castle (inside the outer walls, though), there is a small gazebo on the east side of the castle, on the floor of which is a pentagram. Light your black candle and drop the bat bones (be careful not to bury them) on the ground. A ghost named Thrantax the Mighty will appear and you will be prompted to say the magic words. 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 double figures. If you fail you need to get a new black candle.

Once the ghost is under your control, you'll make your request to free Merlin and the ghost will do as you wish. Now go back inside Camelot and climb up to the very top of the south-east tower. At the top, Merlin will be imprisoned in a purple crystal. Use Excalibur on the crystal and it will shatter. 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