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To find the area, go about halfway through the level as low as you can go. When you get to the area with platforms you can drop down and spike wheels going through them, drop down through the third one to the platform below, then drop to the right to the larger platform below, then drop down again to the left to find a secret hole in the lightning killbox. You can drop down again here into a secret passageway, then follow it to the end to find the Suspicious Person. It basically looks like a Mi-Go from the Cthulhu Mythos and it will ask you for 100k gold. Once you give it the money it will ask for more until you give it 400-500k (I don't remember which). Once you do that it will become a merchant that sells a cool ring (gives you an additional effect for unarmed attacks, and can be bought multiple times despite the UI suggesting you can only buy one) and the Love Quill.
The Love Quill is basically the Suspicious Person's way of asking for more money. They cost 10k each, they do nothing, and they can't be sold. I don't know exactly how many you need to progress the quest line but I bought 60 (600k) since a guide I found on a Chinese website suggested you needed between 2-3 million gold to finish the quest. You'll definitely need around 2 million gold to get everything, so if you're balking at the large amount of farming you'll need to do you may want to buy Love Quills in multiples of 10. It's very possible that you only need to spend 100-200k to progress the quest line and I just wasted a couple hundred thousand.
Regardless, once you have the requisite number of Love Quills, the Suspicious Person will apologize again for milking so much money out of you and return to its home. However, it will leave its body behind to continue acting as a merchant (after this point it won't speak, it will just bring up the shop). It will still sell the unarmed boosting ring and will now sell a ring that boosts the new arcane spell Bound Demon Heart (farm from the Shadow Skull in the Wasted Town), a Broom (low damage weapon that has -60 stamina costs), a ring that gives +5 to health, stamina and mana, and a super powerful new spell that costs a whopping 1 MILLION gold (raise pinky finger to side of mouth). This unique spell's damage is boosted by the average of your current health, stamina and mana values. With 84 Arcane it shoots 2 projectiles but they do absurd damage (over 1000 each).
I would imagine that this whole questline was intended to be done on higher NG+ levels rather than a base game run. The number of projectiles increases based on your Arcane stat, shooting off a metric ♥♥♥♥♥♥♥ at the Arcane cap of 1499 (something like 50 projectiles), while with 84 Arcane I only get 2 projectiles per cast. Furthermore, on NG+10 or something, you'll have a ♥♥♥♥-ton of extra money floating around and enemies will drop a ton so getting to 2 million gold won't be much of a chore even if you don't have all of it right at the start. Nevertheless, I was able to farm all of the gold needed from the Corpse Ball in the E5 Sewer on Estuary Owl Statue in about 2 and a half hours. It definitely wasn't the most interesting farm but it wasn't so bad either (way faster than farming Bladestone in Demon's Souls even with the boosted drop rates in the remake). The spell legitimately does seem absurd, as it deals more than double what my previous strongest did, so if you want to crush the game with magic even easier than before (or have an easier time with magic against the Asomrof content, which is heavily magic resistant) then this quest is worthwhile. If nothing else, the initial dialogue from the first 400-500k gold is quite funny and worth half an hour of farming if you care about that sort of thing.