I would suggest looking at the Beginners Guide on the CS wiki; it's a very good guide.
http://cs.elderscrolls.com/constwiki/index.php/Category:A_beginner%27s_guide
This is from Appendix one of that guide.
Priority (value 0-100)
I've read a lot of confusing and conflicting advice about the Priority Setting you should select. When you talk to an NPC, or they talk to each other, their dialogue is assigned by the priority. The dialogue for higher priority quests will take precedence over the dialogue of lower priority quests.
This is most obvious in the greetings you receive as you progress through the game
The table below shows the conventions used in Oblivion.
Priority Type
1 Tutorials
5 Generic Activities quests
10 Non-quest Dialogue
20 House & Horse quests
40 Training & Vampire quests
50 Miscellaneous quests
60 Guild quests
85 Main story quest
90 Crime & Character Gen quests
This is not a set of hard and fast rules but a convention. You can break it and set your priority to any level up to 100. But, it seems sensible to stick to the convention unless you have a very good reason to break it. This quest has a priority of 50. This means that if you happen to be carrying out a Guild or Main quest in Anvil, and it is active, the game will suppress dialogue which relates to this miscellaneous quest ("Where Spirits have Lease") until you finish the stage you are on.