1. Go back to the quest giver, talk to him again, and try doing the quest again.

2. Reinstall the game with the most current Grayface patch. Make sure to check mark the walls of Mist bugfix.

As for the editor I don't remember the exact answer, but the editor has problems if you run it on a modern operating system. I think if you edit a save it will save the data somewhere else on your computer. I think on Windows 7 it saves it under user\Appdata\Local\Virtual Store/3DO/Might and Magic 7/Saves. If your running another operating system I can't help you much. You'll need to check mark the option to show hidden files, and run it as an administrator.