Having put the "children" to rest, we found several tomes of this house. The Travels of Odo by Morrowind of Candlekeep seems like a morality play, but contains the actual notes for all spells of the first order, each written as part of a story. We also find the private notes and journals of Guston Durst, obviously a formidable spellcaster based on his spellbook which contains spells from the schools of conjuration and necromancy up to the fourth order.
Finding the secret staircase to the basement, we begin to hear chanting in various languages including Galifaran. They all chant to Logoth the Decayer. The stairwell down collapses, trapping us below. Everything down here is undead, and while Nex again looks for loot, the rest of us have the task of confronting these restless undead, seeming led by a naga of some sort. The main chamber is a large chamber mostly underwater. As soon as we disturb the water, what can only be Logoth appears, a huge (possibly undead) plant-like creature.
After we defeat Logoth, the home begins to break apart and burn, we find a passage up to the main floor, we find the main floor burning and the house itself resisting our efforts to escape. Trying to kill us as it destroys itself. However, my companions have tricks all their own, and we are soon able to escape the haunted, dying house.