You should have had 15 silk cloth from before, but if you don't it's okay. Just grind the dwarves right below here to get the cloth. But you have to kill them anyway as part of "Caught". Once it's done, turn it in and get the follow up. You need to click the book that appears on the ground next to the outhouse to get the goodsteel ledger.
You won't finish it now.
You still probably won't finish it.
He'll make you talk to him and listen to his story. By listen to his story I mean you'll probably not read a word of it and just skip the text. After that, get the follow up.
Don't bother getting "WANTED: Overseer Maltorius" and "What the Flux?"
Just start working on it now along with the next few steps, don't hang out here JUST doing this quest.
Golems spawn in the camps, elementals are in the various lava pits scattered around this area.
Kill the spiders here while moving into the dwarves for other quest updates.
You kill the lookouts here to get the spyglass. You probably won't get it on the first few clears.
Curse these Fat Fingers, "STOLEN: Smithing Tuyere and Lookout's Spyglass" "Flawless Flame"
Keep doing laps around this area until you finish all quests starting from step 5, then move on to circuit 2.