Head east to the Blue Palace and enter. There’s three markers once you step inside, but go find Erdi and tell her you need to get into the Pelagius Wing. She’ll hesitate at first, but tell her you are checking it out for Falk and she’ll give you the key. Use it to enter the wing down by the entrance of this place.
This place is in ruins! Head to the left and up the stairs. Keep heading forwards and soon you’ll be whisked away to an unknown place… Here, go listen to Sheogorath talk to Pelagius and soon Pelagius will be whisked away, leaving Sheogorath free to talk. Talk to him and go through all of the dialog options to learn a number of things. In the end, you’ll learn that Sheogorath is the Daedric Prince of Madness and YOU are in the mind of Pelagius the third. Sheogorath is willing to leave… IF you find the way out. Oh, and you will also ONLY be equipped with… the WABBAJACK! Hahaha! You are reliant on it even, as you can’t access the menu in Pelagius’ mind…
Ok, time to get out of here. Note that there are THREE paths to choose from, and all three have objective markers over them. We’ll do this one path at a time:
o Pelagius’ Paranoia:
Let’s take the path to the northwest first. Head down the path while Sheogorath talks about how Pelagius was raised. At the end you’ll hear the familiar battle tune start up, but you’re in no danger. Go up the stairs and you’ll see two summons fighting below. However, to get rid of his paranoia look ACROSS the arena. You’ll see Pelagius and his TWO bodyguards watching the fight. Hit one of the bodyguards with the Wabbajack to “pass” this trial.
o Pelagius’ Night Terrors:
Ok, time to head down the path to the northeast. As you go on, Sheogorath will tell you about Pelagius’ night terrors. Yikes… sure enough, at the end of the path there is Pelagius, asleep. What we need to do here is hit Pelagius with the Wabbajack, which will spawn whatever monster he had terrors about. Then when the monster is out in the open, hit it with the Wabbajack. That’s all there is to it. You’ll summon out things like a wolf, a bandit chief, and even a dragon priest. There’s about five waves of things, so keep using the Wabbajack and soon Pelagius will wake up.
o Pelagius’ Confidence:
Take the southeast path now where you’ll see a GIANT MAN named ANGER beating up on a small man named CONFIDENCE. Ha, well use the Wabbajack to even the odds. Shoot both anger and confidence with it until ANGER is small and CONFIDENCE is giant. Note that anger will summon some help once you start to help confidence out, but keep on hitting anger and confidence until anger is small and confidence is big and you’ll pass this trial.
With all three paths taken, go back and talk to Sheogorath. Tell him you’re done and exit the dialog tree to hear some MORE dialog. In the end, Sheogorath will thank you and let you keep the Wabbajack. He will warp you back to the Pelagius Wing and this quest will be over. Now you can use the Wabbajack to cause randomness and madness whenever you want!