Today I did the quest and i think blizz might of fixed the problem, either that or im lucky.  What i found was that when i went to the alter, Gazban was all ready there, killed him, looted quest done.  The i used the dagger and he spawned again. Now i went to the island where the elementals are, the ones you had to kill to get the bracers, and Gazban also spawns there. so if you cant get the dagger to work for ya, go to the island and try that out