We can start this quest in the Underdark. To start it you need to gain information about the Adamantine Forge. There are 2 ways to get this.
Learn more about the Adamantine Forge
First, you can get it from Filro the Forgotten. He's located at the Sussur Tree area (on the upper ledge southwest of the waypoint). He's hostile and he has a Hook Horror next to him (and one down below) so be careful. Filro himself is super weak so be more wary of the bird.
For the second piece of information, you get it as a reward from the sidequest "Defeat the Duergar Intruders". This quest is started in the Myconid Colony.
Once you have these 2 pieces of info then you'll need to make your way to the Grymforge. We go here as part of the main quest so click on the link below and continue playing until you arrive at the Grymforge.
Once you've reached the Grymforge, head south up the stairs from the waypoint, then make a u-turn and go north up the western passage until you reach an area with rubble blocking your way and some Duergar. This here is another sidequest before you can proceed so click on the link below for more info.
Find the Adamantine Forge
Once you've completed the quest above you should have more info on the forge, and its location, kind of. For now go past the opening you cleared in the sidequest above and follow this path until you reach a long walkway.
Be very careful because there are traps here on the ground. We only need three characters (we'll get to a waypoint in a bit so we can fast travel our party to it). Jump across these traps and go down the ladder just past these. Do note that you can go to the end (there are still more traps of course) but I didn't really find anything useful.
Down the ladder you'll see a platform having from the ceiling and 2 levers. These levers allow you to move this platform around. Have 2 characters jump on the platform, but then one of them have jump on the walkway up ahead. As you do make sure they pick up the Longsword Mould from the ground.
After you do have this singular character make their way south following this walkway until you reach a large area with another platform hanging from the ceiling. Go ahead and jump on it.
Leave your character here, return to the other ones that you left behind and have one of your characters hit the top lever. This will move the platform towards the eastern side. Get off over here and we'll need to go south following the passage. BEFORE you do though, open the large door to the east (needs to be lockpicked) and inside head to the far east and loot the skeleton at the top of the stairs to find a Shield Mould.
Return outside this room then follow the path going south. Jump over the gap when you reach it and before you cross the next metal platform, look to the right and down for a little chest you can grab.
Move to the end now to find another pair of levers. You basically want to hit both of these. One moves the platform where your first character is forward, and the other lever raises it. Also make sure to check the skeleton next to the levers to find a Scimitar Mould.
Once your character has moved across the room, jump down to the next part of the broken walkway and make your way down to find the Underdark - Ancient Forge waypoint.
While you're here, go ahead and have all your other characters fast travel to this waypoint and make sure to grab Mace Mould from the nearby table.
Ok, we're near the end of the quest, but there's still a couple of things we need to do. From the waypoint head northeast up the stairs, and as you go up go left to find the Splint Mould.
Head southeast up the stairs and loot the chest here. You can also read t he Forge Construction Log from the table. It pretty much tells you about making that piece of equipment.
Return to the waypoint and we'll now want to go southwest. The forge itself is south down the decaying stairs, but we need to go southwest first. As you do an easy battle with some reanimated armors start. They act very close to human enemies.
After the fight, go ahead and pick up the Scale Mail Mould nearby. This should be the last one.
From here go south down the slope towards the lava area. This place seems unpassable, but you can go through here. Near the end you can find a huge rock called Mithral Vein you can destroy. Doing so will net you an Mithral Ore. If your Perception is high enough you'll also find a little pit that has a hidden chest. You'll need a shovel to dig it out though. It didn't have anything fancy: a scroll, a heavy crossbow, a Laculite, and 2 Purple Fluorite Shard.
With the ore and moulds in our possession, return to the waypoint and go south down the stairs now. Jump across the gap to reach the Adamantine Forge itself.
Activate the Adamantine Forge
Once here check out what you can interact with: you have the crucible in the center (the large circular object) and next to it a little rectangle. This is the Mould Chamber and it's where you'll place your mould, one of the 6 we got on our way here.
Once you've placed the mould, interact with the crucible in the center and add the Mithral Ore we also recently got. And with that, we're going to have a "boss fight" in a bit so make sure to save your game here. Once you do use the lever on the southern circular area and the entire platform will go down.
Once you are down here it'll be time to prepare so make sure to read down below for what to do, just make sure to have your characters on top of one of the 4 circular platforms. When ready though, interact with the Lava Valve on the eastern circular platform to have lava floor the area and the boss appear.
Ok, so this boss really is something else, especially with the amount of HP and defense it has. You'll barely scratch him, but we're not the ones that need to do the attacking. We have to be smart about it.
First, here's what the boss does: it can attack in a large AOE and do A LOT of damage, probably leaving your characters near death (with just one hit). He will also chase after the last character that did damage to it. This is extremely important because we need to lure the boss around.
That being said, remember that this place will be filled with lava so we only have the circular platforms and the small walkways connecting them. For your characters, you'll want to have one character at the lava valve (eastern platform) and have them stay there. It's recommended you leave someone with the longest range of attack (be it a spell or a bow/crossbow) because we'll need it.
Another character should be left at the lever on the southern platform and left there. For the other 2 characters, have them be your strongest ones and leave them on the western platform. There's a reason for this.
Once you do this, spin the lava valve to have the area be filled with lava and the boss appears. Once this happens, the rest is very straightforward. Have one of your 2 characters on the western platform attack the boss so it targets them. After you do make sure to move your character so that the crucible is between you and the boss. You want this because as the boss moves towards your character it'll stop at the crucible.
When this happens have your character at the lever use it to have the hammer come down and deal tons of damage to the boss. Yeah, this is the way we kill/destroy it. Of course it's not that simple. As soon as this happens the boss will be stunned and won't be able to act until its next turn, but the lava will disappear, bringing out 4 Magma Mephit. These things are super weak and are the reason why you left your strongest characters over here. They are super annoying if you let them. They love to inflict burns on your characters and that's never fun.
Deal with them ASAP and on your next turn you want to do the same thing again: use the lava valve to refill the room with lava, then use the other lever to have the hammer smash the boss. What makes this fight super easy, or a bit harder is the boss's turn. If its last then it's great as you can do this without having to worry, but if not then the boss might move. If this happens, have the character near the lava valve attack the boss. This is the reason why we needed a long range character over here. Given that them and the character that first acted as a bait are in opposite sides of the room, being attack to attack the boss with the lava valve character will have the boss most likely return to the center, giving you a chance to use the power hammer and kill it.
Killing the boss this way may take 2-3 times under the power hammer depending on your difficulty, but the remaining of the fight is pretty much the same.
Pick up the forged item
After the fight go to where you placed the mould to pick up the piece of equipment you just made and bring the quest to an end. Make sure to also loot the boss to find Grymskull Helm.