Here's some more info on Lord Dyana. I've never seen or heard of him being spawned, but in theory, there are two rooms connected with a staircase near the zombie knight (and captain Hess) room.
No problem. I keep hearing that the reward is this uber bow - Stormfire - that is usable at level 28. I have never seen one tho, and it does nto show up in the item search on SoE's site.