Long story short, near the end of the quest when you need to kill Malkoran he becomes invunerable and his AI is broken if you use the Unrelenting Force shout on his Shade form. This happens after you kill the human form of Malkoran and 'Malkoran's Shade' appears to fight. He takes the hit from the Unrelenting Force shout, reels back, and then turns into a floating statue that can't be killed. Anyway, I took a screen shot to show you. As you can see he's not even facing me. He just stands there (he doesn't attack) and you can't kill him. I tried htting him like 30 times and his health bar doesn't move. As I said, the Unrelenting Force shout causes this bug.
[img]http://i42.tinypic.com/25a4583.jpg[/img]
I realize the quest marker is on the human body, but trust me it doesn't have any reason for being there. You have to kill the Shade for the quest to proceed. I even tested killing the shade without the unrelenting force shout and everything went like it was supposed to.