Our heroes were setting up camp when Rowan discovered she could turn into the creatures of the forest, she ran through the woods as an elk until she was set upon by two Quasit's (Small demonic creatures) who said something about having found "it" and Landiel being pleased and then referring to "it" having many friends.
She led the fiends back to the camp and the party killed one , the other escaping off into the night.
The party then spoke with Sildar Hallwinter , the human who they rescued. He explained that Gundren had discovered his family's ancestral mine and home which also happened to be the place where the Pact of Phandelver was signed.
The party continued with him on to Phandalin and were foiled when a group of mysterious thugs manning a wooden stockade would not let them in.
Fortunately a halfling spoke for them and they were let in.
The halfling, Yannock Bookbinder, did this so that the heroes would help him clear out his basement, he was adding an extra room and tunneled into some sort of ancient crypt and undead creatures spilled out into his basement which he promptly boarded up.
While this was being divulged, Onys Kiirnodel followed Sildar to the Townmaster's Hall where he found Townmaster Harbin Wester and began to give him a 20 minute angry lecture about letting thugs and ruffians become rampant and take over the village. He also said a name "Iandro" to which the Townmaster replied that he "Went up into the manor and hasn't been seen since."
Sildar said he was going to get himself equipped and that he would have a payment of 50 gold for the party for rescuing him and escorting him to town.
The heroes went down into the basement upon Onys's return and destroyed the undead menace and recovered some treasure which they were welcome to keep.
That night they shared the hospitality of the halfling scribe ready to explore the town the next day.