Golrie is a gnome found in the jail of the Tree Gnome Village dungeon. He locked himself in a room to avoid some hobgoblins, but managed to leave the key to unlock the door elsewhere, outside the room. He was not planning on leaving until the hobgoblins departed, but does ask the player to help him solve his dilemma in the Waterfall Quest.
The key can be located by searching some crates on the east side of the dungeon, the crate is on the east side of the room as you first enter, and it is slightly a different colour than the others.
He rewards the player with Glarial's pebble when given the misplaced key to the door in the Waterfall Quest. After starting Roving Elves, the Hobgoblins get locked in his cell, and he escapes.