How do I progress through duergar camp?

I am currently doing a opportunistic RP run and having trouble with the duergar/Nere dynamics.

So far I did minimal side content as my characters agenda would be to be cured/reach moonrise asap hence my party is only level four.

When I arrived at the duergar camp through the lake together with the duergar patrol, I freed Nere but whichever Dialogue I choose, I end up having to fight the druergar either against Nere or supported by him and backstabbed mid-fight.

I read that the only way out of this is to conspire against Nere but the Elder won't talk to me about it. My only goal is to acquire the moonlantern mentioned by the elevator guards.

Does the game simply want you to eliminate the entire camp? Am I stupid and missing something?

How do you guys usually deal with this part of the story in good/evil/neutral runs?