i picked up Finn's Lute while plundering that dungeon for a different quest. when i picked up the Finn's Lute quest i was immediately able to turn in that quest. i got all the rewards and it said it removed Finn's Lute from my inventory... however the lute still is in my inventory taking up 4lbs of space and the quest still appears in my log directing my to return Finn's Lute to the NPC.
im worried this will affect Xbox achievements aside from the annoyance of having to continue looking at the evidence of this bug in my inventory and quest log.
regardless of this issue, absolutely stellar game and i am enjoying it thoroughly!