1. Investigate the murders in the Foundry. Speak to Alissa Tield, Thildon, Saros, and Bedai-Lihn. You will have to run back and forth a bit.
2. Forge an item. Buy a hammer, tongs and apron from the Clerk's Office and get a piece of iron ore from one of the smiths. Pick the option to make a battleaxe.
3. Talk to Sarvos (take the stairs next to Nihl Xander), the other factotum, and pick the conversation tree that leads to convincing him that the things he has seen are tests. Do NOT tell him to end it all.

You can now join the Godsmen, or not. Talk to Keldor to buy spells and weapons. The weapons they have are *very* good, but only useable by Godsmen.

If you want to see the secret project, you must become a Godsmen. Ask Keldor for the token and put it in a Quick Item slot, and ask the guard to open the door.