Pretty easy quest. He is the end boss for this instance, just kill him and everyone who has the quest can take his head.

There is an easy way to kill Arugal. Tag him and run back to the main chamber, where you killed Fenrus. The person who has aggro stays in the Fenrus room. Everyone else goes to Arugal's room. What will happen is Arugal charges towards the Fenrus room and then whacks one or two times (at most, sometimes none at all) and teleports back to his main room. This allows the other members of the group to smack Arugal around until his aggro changes to someone else. This new person can then go to Fenrus' room and repeat as before. Everytime he teleports, he'll erase any dots on him, but he will not reset his health (as of 4/3/06). This most likely will be patched, however.

A few other tips. Do not go into the room to kill Fenrus. Kill him in the hallway. Have the tank stand in the hallway to attract the mobs that spawn afterwards. If you kill a named, sometimes a new wolf-man spawns in a place that you may have cleared. For example, when you kill the Baron, a wearwolf spawns in the room adjacent to the courtyard and adjacent to the Baron's room. This can complicate pulling, so go back and kill this. The tricky pull spot is the Knight's room (up the stairs past the Baron's room). Here is a way to pull this room. Have a warlock cast Eye of Kelrog and have a priest cast the spell-shield on it. The eye can get aggro, but the mobs ignore it unless it gets too close. As a result, you can pull fewer mobs and sometimes even singles from clusters of mobs. (This works in general.) In the Knight's room, have the tank grab the ghost in the hallway. Then send the eye all the way to the right (upon entering) and grab the attention of the Knight's in the back (the side opposite of the named mob). You can clear the room in this way so that when you pull the named you only get 2 adds. Of course, you can also just send in the puller.

All in all this is a challenge. Did this with 4 26s. (Mage, Warlock, Warrior, Priest.)

As Obaa, said above, it requires level 18 to take the quests, but also, it is NOT part of the Arugal's Folly quest chain, so if you are interested in making a twink character with the Seal of Sylvanas, you don't have to go through the chain getting a lot of exp.