Act 1 Quest 5: Tools of the Trade - Diablo 2
Quest Location: Outer Cloister/The Barracks
Quest NPC: Charsi
Quest Goal: Retrieve the Horadric Malus
Reward: Imbue an item of your choice
This quest begins by speaking with Charsi in the Rogue Encampment after freeing Cain during Act 1 Quest 3: The Search for Cain. Alternatively Charsi will give this quest to you at some point later in Act 1 if you decide to never free Cain.
What you need to do for this quest is to travel to the Monastery Barracks which are located near the Outer Cloister Waypoint. Inside of the Barracks you'll want to search for the Horadric Malus which is on a small forge (pictured above) somewhere in the Barracks guarded by a Super Unique by the name of The Smith.
You can easily locate the Horadric Malus by paying attention to your map as the forge holding the Horadric Malus will have a special marking on your map (pictured below). When you get close enough this mark will appear on your map. Typically it appears before you agro The Smith, but it may depend on a character's Light Radius.
The Horadric Malus Map Icon.
Once you've obtained the Horadric Malus all that's left is to return it to Charsi in the Rogue Encampment. Your reward for this quest is the opportunity to imbue an item of your choice (basically to make it a rare). Whatever ilvl item you use will be the same one you get back from Charsi, with this in mind, try to use high ilvl/exceptional or elite items. They will produce you the best items.