Steafan is a prisoner in Kal'Hirol.
Involvement
Steafan came to Kal'Hirol in search of treasure, however he was caught by the darkspawn and the Warden finds him in a cage with darkspawn all around. After dealing with them the Warden can talk to Steafan. He is terrified and a bit jumpy, but otherwise unharmed. At least that's what he claims. When asked if he has the taint, he becomes extremely nervous, and denies it. It is never revealed if he does or doesn't have the taint.
Result
You can release him and he will give you a Masterpiece Flame Rune or Grandmaster Flame Rune and you can meet up with him in the City of Amaranthine, kill him (losing influence with Nathaniel, Justice and Sigrun), or leave him to rot in the cage (no loss of influence.) Another option exists which is to make the deal with Steafan, then leave him to rot after you've received a Masterpiece Flame Rune losing no influence with any party member. Killing him after accepting the deal will result in a loss of influence with some party members.
If you meet up with him in Amaranthine and ask him about the taint, he will run away quickly.