I tried this quest early on, and quickly got overwhelmed by skeletons, so I put it off until way later.
So tonight, at level 23, I went back, and found I could fell skeletons with one swipe of the axe, so I pressed forwards. Kind of a fun mission, actually. I focus on swords, axes, and heavy armor, and have enchanting as a minor skill but haven't really used it yet.
So I reach the tomb, and the lich is absolutely ludicrous. His shock spell eats half of my health per hit, and my best weapon, an orcish axe that does 17-28 damage per hit, doesn't even seem to be hurting him at all. And he seems to have unlimited MP.
I quickload, and for some reason he stops using magic and comes after me with a sword and shield. Although the sword isn't anything special, one hit usually knocks me on my behind at does 20%-40% damage. So I can't even stand toe to toe with him. Great.
I fumble around with my magical options. I have a lot of options, but everything seems worthless against him. You know what would up working? A Turn Undead spell I just happen to have. Why do I have it? Because I was trying to buy as many cheap spells as possible, just so I could experiment with enchantments.
With Turn Undead, he stops attacking me, and runs away. This doesn't seem to expire at all. But I'm far from finished; I still haven't got anything that can hurt him.
I loot the room, and find an ebony longsword on the fallen body of Mara. This weapon hurts him... barely. It takes at least five whacks to deplete even one pixel of his life bar, and he regenerates a pixel in the timespan of a single miss. It takes me at least 30 minutes of running around the room, hitting him with the ebony longsword, until he's almost dead. So I decide to pull out a Soultrap scroll and cast it. In the time it takes to do this, he's regenerated a few pixels. It takes me nearly a minute of running around the room and hitting him to kill him and trap his soul.
Is this quest just broken or something? Maybe the lich is levelled? The mission leading up to him wasn't challenging at all. The lich himself was the most frustrating thing I've seen in this game - I honestly don't know how you're supposed to beat him.
On the bright side, the several hundred or so times I've hit him with a longsword has raised my long blade skill to 100. Also, I now have an ebony longblade and a 300 point soul.