Ok for people having trouble with the quest not working...

drop/abandon the quest.

Re-acquire the quest from Kaitlin the blade...which is where you've come from in the first place.

Go back to the alter and stand INSIDE the blue/purple light stuff.

Activate the alter and it should work.

Some quests that appear to be broken aren't really broken.
They have odd quirks about them and something thats done out of step might throw a wrench into the works.

If that doesn't work...well...Abandon it and move on...lifes too short. Besides...unless you're a clothy...you can;t really use the robes anyway.