Dealing With Nyrid
Head back downstairs and confront Nyrid. From here, you have two options with how to deal with him.
Option 1: Make a deal with Nyrid and kill Purnisc.
Tell Nyrid that if he gives you a discount on Svef, you will walk away from the situation. He asks you to kill Purnisc as a show of good faith. Walk upstairs, use the attack icon on Purnisc and murder him. Go back downstairs and tell Nyrid that the deed is done. You now also have a discount on Svef. If you choose this option, Kaenra will have left the tavern and the quest will be completed.
Option 2:Kill or capture Nyrid
Attack Nyrid and fight his posse of mercenaries. If you have a dungeon built in your Stronghold he will surrender when near death and be sent off to Caed Nua. You can also just flat out kill him and his men. Either way, once you are done head back upstairs and talk to Purnisc again.