Bjornolfr was killed by the two bandits (if you go into the basemant in sneak mode, you overhear them say that). The two bandits mention something about Hrodulf getting out of the house, but "perhaps the ash spawn got him".
Oh well I guess there's no mystery concerning their deaths... but I still think there's more to this story than simply an obsession with unearthing dwemer machinery. The dwemer are known for having kept things of great power and mystery (from the Oghma Infinitum and a Black Book to the Heart of Lorkhan) under lock and key, so I think there must be something hidden in that thing; I really want to find out what it is, although I don't think any good will come of it being unleashed into the world. Anyone have any ideas as to what "fire from the deep" or "the earth will take us both" could be alluding to?
OP, for some reason, your post reminded me of this.
http://www.youtube.com/watch?v=y6ctuG29VUE
lol