Did you pick up the Gem and had it on your inventory when you got back to him?
The dungeons might seem a bit hard, However, they are designed to be extremely tough and very demanding on both your gold as well as your equipment.
Many of the players at these high levels have aquired armors which grant over 50% resistance to pretty muich everything, and in many cases 100%. So to counter this and take them down to a healty level things get very tough if your your gear doesn't match the task.
With full Tier 3 (Dropped in The Lich Kings tower) And some nice weapons from there or elsewhere it shouldn't be impossible tough.
I've acctully buffed up the magic users (Magic vise, not thier melee capacity) to both make the armor sets dropped more viable with their spread effects, (not just 100% of one this) to counter the many, many debuffs you will encounter at once. Also to better align magic and the fact that you can easily dodge spells comming at you.
Have fun and be persistent =)
Ohh, and by the way, without some heavy scripting which demand time, it's pretty much impossible to make nice and tacitcal fights, because of the very limited magic effects. I care to disagree tough, since I find the Shardtail fight tactical to a healthy degree. And as allways if you have some constructive suggestions on for example how to make some tactical fights to hesitate to send me a PM about it.