All seemed to go ok in Ust Natha until Phaere ordered us to kill Solaufein. He responded with nothing but "I have no interest in speaking right now. All I desire is to remain here and drown myself in black mead until I forget I ever met that witch".
I poked around with NearInfinity (I don't really know what I'm doing, but it's fun

I checked with the console (GetGlobal("SolaufeinJob", "GLOBAL") and it showed 7, then I used SetGlobal("SolaufeinJob", "GLOBAL", 8 ), and then I got the dialogue options where I can kill him or get his cloak and let him go.
Note that I have Weimer's Solaufein mod (version 103) installed, as well as Xulaye v1 - although at this point (i.e. before dealing with the eggs, etc), Solaufein is probably the original one, not the Weimer version.
Anyway, not a serious bug, and I'm not sure if it's caused by Xulaye, Solaufein, or some weird interaction between them when I didn't take Xulaye, but I thought I'd mention it here ...