Whoa!  Be careful.  It's not over when he surrenders and asks you to spare his men.  You still have to get out and his cohorts remain hostile.  It was an easy quest as a 37 druid until I ran into a buzzsaw after he surrendered when I ran back into the main room at half strength and four of 'em jumped on me.  Cost me a health pot and a moment's anxiety.

Also I found him in the main 'captain's quarters' on the second deck, not all the way down.  Probably spawns both places at times.